Get a better credit rating

Get a better credit rating today. Ensuring that your financial house is in order positively affects your personal and business life. So follow these simple steps and get a better credit rating now.

1. Get to know your credit rating

Getting a better credit rating starts with becoming familiar with your own credit score. Keep tabs on your credit rating. Request free credit reports annually. Doing so makes you a more informed applicant. It also helps you keep track of changes to your credit over time.

Check your credit report in detail. There are a surprising number of mistakes and outdated information on credit reports. If you encounter an error, contact the lender involved and ask them to notify the credit bureau with the correction.

2. Pay your bills on time

Paying on time is crucial to good credit. Your payment history shows that you have a reliable financial history (or, alternatively, your history can show that you’ve been over-extended or disorganized). Even small infractions such as a late credit card payment can make it difficult to get a better credit rating.

Above all, from now on, pay all your bills on time.

If you are in a cash crunch making payments can be difficult. If you are having financial difficulty, contact each lender as soon as possible. Let them know that you are having trouble, and try to negotiate more favourable terms or lower the payment.

3. Show credit responsibility but reduce unnecessary credit

Having a few credit cards that are paid off every month actually helps your credit. Make sure that you have at least one or two credit cards that are paid off on time every month. This shows lenders that you keep track of and keep on top of your finances. However, don’t go overboard. Too much credit can be detrimental to your credit rating, even if the balances are paid off.

Your available credit is calculated by the credit bureaus to determine how much credit you have access to. For example, if you have a credit card with a $5000 limit and the balance is at zero, the credit bureau will still see you as having access to that $5000.

Balance is key. Show responsibility but reduce unnecessary credit.

4. Limit the number of hits on your credit

Every time a lender requests your credit report this "hit" is registered on your credit report. For this reason, in Canada lenders must always ask for your authorization before performing a credit check. The more hits showing that lenders were inquiring about credit can be a red flag to the credit bureau.

To get better credit don’t allow any more hits to your credit than are absolutely necessary.

5. Pay down debt by reducing spending or increasing earnings

If you want to get a better credit rating, chances are you could benefit from reducing your expenses or earning more money.

Many people get second jobs or become consultants to reduce their debts. Doing so will allow you to pay down more debt and get a better credit rating. When paying down debt, pay your highest interest loans first but continue making minimum payments on your other responsibilities.

If you’d like to know more about how to become a consultant and reduce your debts, consider the How to Become a Consultant course.

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