How to Improve Your Credit

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Have at Least Two Active Reporting Credit Accounts As a rule of thumb having at least two active trade lines (credit accounts) for two years with a minimum credit limit of $2,000, the 2/2/2 rule, will help build your credit history and open up your mortgage options. That being said if you do not have an established credit rating some lenders will allow alternative methods to proving your credit worthiness. If you are new to Canada there are also mortgage products available in this circumstance. Get a Secured Credit Card If you are not able to get a unsecured credit account get a secured credit card. Since there's no risk to the lender because you've put up the cash to cover your balance, secured cards are great for new borrowers or people trying to re- establish credit after a bankruptcy. Once you've established your ability to manage the card you can ask for the security requirement to be dropped and your deposit returned.  Pay Down Credit Cards Pay down your credit cards so you're only using 50% of your limits. Start by paying down revolving credit accounts like credit cards as they seem to have a more significant impact on credit scores than car loans, lines-of-credit, and so on. Limit the Use of Credit Cards Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there is a balance at the end of the month, this affects your score. Credit formulas don't take into account the fact that you may pay the balance off the next month. It is important however to also use your credit as dormant credit accounts will not improve your credit rating. Check Credit Reports for Accuracy If your lender is slower at reporting monthly transactions, this can have a significant impact on how other lenders may view your file. Ensure everything is up to date on your credit report as old bills that have been paid can come back to haunt you. Credit reports can be ordered through both the Equifax and Trans Union websites. You also have a right to dispute any inaccuracies directly with the credit agency yourself. Don't Apply for Too Much Credit at Once Don't lease a car, open a new credit card and apply for a loan all in the same month or two. The credit bureau may see this as a sign of financial difficulties. Also be aware of being pre-approved by several lenders before you're ready to buy. You can check your own credit report without penalty however, credit inquiries from lenders may count against your credit rating Keep Old Cards Older credit is better credit. If you stop using older credit cards, the issuers may stop updating your accounts. As such, the cards can lose their weight in the credit formula and, therefore, may not be as valuable. You should use these cards periodically and then pay them off. To keep the card active set up your monthly bills such as you phone bill to be automatically charged to your credit card. This way you will be utilizing your credit card with bills that are required to be paid monthly. Don't Let Mistakes Build Up You should always dispute any mistakes or situations that may harm your credit. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation.