People have credit issues for a variety of reasons. Divorce, job loss, and other financial hardships can wrack up debt quickly. Whatever your reason, it’s never too late to improve your credit score, and we’re sharing our top tips for bringing up those numbers, allowing you to qualify for mortgages, loans, credit cards, and more.
Understanding Your Credit Score
You can’t learn how to improve your credit score if you don’t know what the numbers mean! Familiarize yourself with credit score ratings, including what is considered low or high. In Canada, there are two credit bureaus that report your credit score: Equifax and TransUnion.
Credit Score Ratings
300 to 560: Poor
561 to 659: Fair
660 to 724: Good
725 to 759: Very Good
760 to 900: Excellent
It’s recommended you maintain a credit score of at least 660, since most lenders won’t approve you for credit cards, mortgages, or loans with a lower score. Of course, the higher your score, the better financial services you’ll have access to, including lower interest rates when you go to purchase a home.
How is Your Credit Score Calculated?
Put simply, your credit score is a measure of how you use credit. It’s calculated based on a variety of factors, including how much credit you have, how much debt you’re carrying, and your payment history.
Tips on How to Improve Your Credit Score
Pay Your Bills on Time
Your payment history is a major consideration for any lender. If you consistently make payments on time, especially if you often pay in full, it reflects well on your ability to manage your credit responsibly. If you’re forgetful, set up automatic payments to ensure that you still make payments on time.
Keep Your Credit Utilization Score Low
Maxing out your credit signals to lenders that you have difficulty managing your debt load and you may struggle to make payments on new loans. In general, you should try to keep your credit usage under 30% of your total limit.
Limit the Number of Credit Applications You Submit
When you apply for credit cards or loans, choose wisely. Each application results in a hard inquiry, which can lower your credit score. Limit how often you apply for new accounts and don’t send out more than one application at a time.
Review Your Credit Reports
Knowledge is power! Review your credit score regularly and check for evidence of identity theft or fraud. Any inconsistencies should be reported to your financial institution immediately.
You should also look for unpaid balances or accounts that have gone into collections. Clearing outstanding debt is one of the easiest ways to improve your credit score.
Beat Bad Credit & Rent to Own a Home with JAAG Properties
If you’re struggling with no credit or bad credit, you don’t have to abandon your dreams of homeownership. Our Rent to Home Solution is designed to help you build positive credit, increase your credit score, and own your home faster!
Contact us today to learn more about how we can guide you through the homebuying process.
