How to improve your credit score

Make 2019 the year of money! No more excuses – it’s time to make some financial fitness New Year’s resolutions. And you can start by improving your credit score.

One of the most important pieces of information any financial institution has about you is your credit score. This number indicates your capacity to repay a loan and is based on your credit history. A low score means you may be perceived as risky to loan to and will impact everything from the products you can get to the interest rates you will pay.

If your credit score is low, there are a few things you can do to improve it. The most important is to take action now – not tomorrow, not next year ­– because although credit scores can decrease rapidly, they will only increase slowly. There truly is no “quick fix”.


Here are a few tips on how to improve your credit score.

Start by requesting a copy of your report from the credit bureau – the two largest in Canada are Equifax Canada and TransUnion Canada. Either submit a request through the mail to get a free report or fill in an online form and pay a fee to get a digital copy. Once you have your credit report, check your score to get a sense of where you’re starting from and review the report for any errors that that need to be fixed.

Next, try to paying off any overdue bills or debts that have gone to collections. If you don’t have the money to pay them all, start with the oldest to try and pay it off before it is removed as this will do more to improve your score than waiting for the debt to disappear after roughly six years (click here for details on how long information appears on your report). Another option? Pay the lowest balance first, according to Rory Sperling, Manager Personal Lending with Encompass Credit Union. “Focus on paying extra onto your credit account with the lowest balance to rid yourself of payments sooner. Once paid off, you can allocate these funds to savings and be less dependent on credit cards or lines of credit to cover unexpected expenses,” Rory advises.

If you have a really low score, open a secured credit card (a card that requires a deposit upfront) which can be easier to get than a traditional card but still helps improve your score as long as it is repaid on time. If you already have a credit card, always pay it on time, even if you can only make the minimum payment. It only takes a few missed payments to impact your score, so set-up automatic withdrawals to avoid being late.

Finally, even though it seems counter-intuitive, if you have room on a card then start using it more frequently (but still pay it off to keep the balance low). This shows you can use credit and pay it back, decreasing perceived risk. If possible, increase your credit limit to reduce the credit utilization component of your score – but only if you can commit to managing your credit wisely. Remember not to apply for too many credit products at once, as many applications include credit checks and these checks can negatively impact your score.

Working on improving your credit score is a vital first step towards financial fitness. Need help determining what options are available to you? Talk to your local credit union. Credit unions operate as non-profits, accountable only to members. So helping you figure out the best strategy to achieve your financial goals is our priority, not how to increase our bottom line. Find your local branch today.