/ Finance 101

5 ways to improve your credit

When you’re caught in a cycle of debt and you’re not sure how to get out, raising your credit score may be the last thing on your mind. But did you know that the steps you can take to raise your credit score can also help you get out of debt?

Now that you understand how credit scores work, try these tips on how to raise your credit profile. Here are five suggestions that can help you take control of your bills and your credit score.

Improving your credit might not happen overnight, but with some good habits and dedication you will be well on your way.

1. Automate Payments

Remembering when each payment needs to come out of your account can be difficult – but missing payments can impact your credit score. Any chance you have to automate payments is an opportunity for you to make sure that you’re paying your debts on time. The more consistently you demonstrate that you pay on time, the faster your credit profile will improve.

2. Avoid Non-Sufficient Funds (NSF) Fees

NSF fees are expensive, and are a good indication that you are spending more than you are bringing in. Use a calendar and write down when your automatic payments are coming out, and make sure that you deposit money before your withdrawals are scheduled. This will help ensure that you have money available to make your payments, and that you’re not overdrawing on funds.

Demonstrate responsible borrowing habits by only taking out the credit that you need and can afford to pay off in the scheduled period of time."

3. Pay your account in full each month

It can be tempting to carry a balance on your account, but while you may think that you’ll pay it “later” you are risking the fact that you may not have the funds to pay the balance down to zero at a later date. If you need to use your credit card, make sure that you are spending money that you can afford to pay off right away each month. This will prevent you from spending beyond your means, and will help improve your credit profile.

4. Try an app or budgeting tool

It can be hard to understand exactly how much money you are spending and what you’re spending it on, so why not try a budgeting app or tool that will help you visualize your financial situation? While it may seem that you’re saving quite a lot each month, a pie chart or graph can show you how much you’re really putting away relative to what you’re spending.

5. Limit the amount of credit you apply for

Taking out lines of credit or new credit cards to pay off old debt is not an effective way to handle your finances – in fact, this can lead you into a cycle of debt that may be hard to climb out of. Not only that, but each credit application is reported to the Canadian Credit Bureaus and saved on your credit history. If you apply for credit too often, your credit score will lower. Demonstrate responsible borrowing habits by only taking out the credit that you need and can afford to pay off in the scheduled period of time.

Good luck and happy savings.


This article is for informational purposes only. For personalized financial advice, you should contact a qualified financial advisor.

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