How to Change Your Behaviour and Improve Your Credit ScoreApr 27, 2018
Increasing your credit score offer plenty of positives. A higher credit score gives you more borrowing power, qualifies you for lower interest rates, and allows you a little more freedom in your financial life.
To improve your credit score, though, you need to first understand what it is and how your spending behaviours impact it. Surveys have shown that Canadians may be missing some knowledge in this area — a 2017 TransUnion survey found that 56 per cent of Canadians don’t know how their credit score is calculated.
Credit scores change based on your use of credit. You want to avoid risky behavior, like missing bill payments or taking out multiple credit cards at the same time. If you are prone to overspending, avoiding negative habits can start your credit score moving up. Here are a couple ways to get started.
If you’re missing deadlines on payments, consider making them automatic.
Constantly falling behind deadlines and missing credit card payments? Many companies offer the option of automatic withdrawals from your bank account. This has the “set it and forget it” benefit, but it also allows you to set a cap on your credit spending. You can make it a monthly goal to stay below your automatic withdrawal amount and use the remaining money to add savings or debt relief goals. Which brings us to…
If you’re using too much available credit, consider debt relief options.
Many forms of credit, such as credit cards, come with steep interest payments. Make it a priority to pay off these forms of debt, either with a solution like credit counselling or a consolidation loan, or some DIY tactics. This blog from Canadian Budget Binder details the debt snowball technique, which is great for earning small wins toward your ultimate goal of eliminating debt.
For more strategies that will help you improve your credit score and rebuild your credit, listen to this podcast featuring advice from our Licensed Insolvency Trustees.