Your credit report represents the management of your debts, the past. For a lender, the credit report is important. He wants to see how you have managed your debts and payments. Do you carry high balances, what types of credit you hold, how much credit you have, have you had any late payments? All this information will have either a positive or negative impact on your credit score.

What is the purpose of the credit score?

It indicates to the lender the likelihood that you will default. The lower your credit score, the higher the likelihood of default in the eyes of the lender. This may result in a refusal by the creditor. So, it is very important to manage your debts well.

How to improve your credit score?

There’s no magic secret, here are some of my recommendations:

• Firstly, reduce credit card balances as much as possible. Try not to exceed a balance higher than 75% of the limit. If you can reduce your credit card balances to less than 50% of the limit, that would be even better! The lower the balances compared to the credit limit, the higher the score increases!
• Credit limits below $2500. You don’t want to overspend, so you lower the credit limit! Is it a good idea ? Not great in terms of the credit score. Having a $500 limit, for example, with a $100 gas fill-up, you’re already at 20% of the limit.
• Do not make late payments, especially on your mortgage payment if you have a mortgage or a home equity line of credit. And also, pay attention to your cell phone payments. Lenders don’t really consider the payment, however, a late payment will have an impact on your credit score and the lender will ask questions!
• The number of credit inquiries! No more than 4 per year! If you are denied, ask why and try to correct your credit file, the situation, or wait a bit.
• Avoid having collections that could be reported on your credit file!

Is it important to validate your credit file?

It is also recommended to validate your credit file at least once a year and before applying for credit to ensure there are no errors. Errors can occur. So, by validating your credit file, if you notice any errors, you’ll be able to get them corrected.

You can make your own corrections by contacting the credit bureaus (Equifax and/or TransUnion), or you can reach out to me for assistance.

Here are the links for the credit bureaus:

• Equifax : https://www.consumer.equifax.ca/fr/
• Transunion : https://www.transunion.ca/fr

Your credit score is very important. It’s always important to ensure that your credit file is error-free and that you have a good credit score.