You are not alone if you’ve been wondering how to boost your credit score. At EmpireOne Credit, we’re all about empowering you to take control of your financial destiny, and improving your credit score is a key step on that journey.

Credit scores can seem like a mystery, a secret formula concocted behind closed doors. But fear not; we’re here to demystify them for you and provide some easy-to-follow tips to help you improve your score.

What is a Credit Score, and Why is it Important?

First things first, let’s talk about what a credit score is. Simply put, a credit score is a three-digit number representing your creditworthiness to lenders. In Canada, credit scores is between 300 to 900. The higher your credit score, the higher chance you have to obtain credit.

Your credit score impacts many areas of your life, including the interest rates you’ll receive on loans and credit cards, your ability to rent housing, or even your eligibility for certain jobs. So, it’s important to aim for a strong credit score.

Factors That Influence Your Credit Score

Your credit score is calculated using a variety of factors, including your payment history, the amount of debt you owe, the length of your credit history, new credit inquiries, and the types of credit you use.

• Payment History (35% of your score): This is the most crucial factor. It looks at whether you’ve paid past credit accounts on time.
• Credit Utilization (30%): This is the ratio of your current total debt to your total available credit. Lower is better!
• Length of Credit History (15%): How long you’ve had credit impacts your score. Longer is typically better.
• Credit Inquiries (10%): Applying for new credit can cause a small, temporary drop in your score.
• Types of Credit (10%): A mix of credit types (like credit cards, auto loans, and mortgages) can help your score.

Now that you understand the basics, let’s dive into some strategies to improve your credit score.

Tips to Boost Your Credit Score

• Timely payment: This is the most crucial thing you can do to boost your credit score. Even if it’s just the minimum payment, ensure you’re never late with payments.
• Lower Your Credit Utilization: Try to use less than 30% of your total available credit. If you have a credit card with a $1,000 limit, keep your balance below $300.
• Limit New Credit Applications: Applying for a lot of new credit in a short time can make you appear risky to lenders. So, apply for new credit sparingly.
• Keep Old Credit Accounts Open: Keep them open unless there’s a compelling reason to close them, like a high annual fee. This can help lengthen your credit history.
• Diversify Your Credit Mix: Over time, try to have a mix of different types of credit. This shows lenders that you can handle various forms of credit responsibly.

Important Things to Note in Boosting Your Credit Score

Keep Your Credit Utilization Low

Credit utilization refers to the percentage of your available credit that you’re currently using. It’s a key component of your credit score calculation. For instance, if you have a credit card with a $5,000 limit and you’ve used $2,500 of that, your credit utilization ratio is 50%. Keeping your credit utilization below 30% is generally recommended, as higher ratios may indicate to lenders that you are a riskier borrower.

Limit Hard Inquiries

When you apply for a credit card or loan, a hard inquiry is recorded on your credit report. These inquiries can lower your credit score and add up if you’re not careful. Multiple hard inquiries in a short period of time can signal to lenders that you’re a high-risk borrower.

Consider a Secured Credit Card

If you have a low credit score or no credit history, a secured credit card can be an excellent tool for building credit. A secured credit card is backed by a cash deposit you make upfront; the deposit amount is usually the same as your credit limit. You’ll use the card like any other credit card, and if you make your payments on time, your credit score will gradually improve.

Check Your Credit Reports Regularly

It’s crucial to check your credit reports regularly to ensure there are no errors that could hurt your score. If you find inaccuracies, like payments marked late when you paid on time or accounts you don’t recognize, you can dispute these with the credit bureaus. You can check for free in a year.

Conclusion

Improving your credit score doesn’t happen overnight, but you can make significant strides in the right direction with dedication. By following these tips, you’ll be on your way to a stronger financial future.

At EmpireOne Credit, we’re here to help you every step of the way. Whether you have issues with multiple debts that have led to sleep loss, anxiety, a low credit score, and headaches. You don’t have to do it all alone; we can assist you in getting rid of your debt and reducing it by up to 80%, and interest will stop immediately. Call us today at (416) 900-2324 to schedule a free consultation. Being debt-free feels good!