7 Tips to Improve Your Credit Score

Few things are more frustrating than applying for credit and being denied. Whether your credit score isn't as high as you'd like because you're just getting established with credit and finances, or you've had some financial setbacks and would like to rebuild, you have options to raise your credit score. Over 60 percent of your credit score rests on factors you can control, including on-time payments and how much credit you use in relation to your total amount of credit available.

Tip #1: Monitor your credit score regularly

You can't fix a problem you don't know about. Some credit experts estimate that up to 80 percent of credit reports contain errors. Even a simple error like a credit card limit that's reported as $4,000, when you really have $5,000 available, could affect your credit score.

Tip #2: Pay your bills on time

Did you know that a 90-day late payment could impact your credit score almost as much as a bankruptcy? If you pay all your bills on time, a 90-day late payment can take more than a year for its impact to fade, but the negative impact of 30- to 60-day late payments can be overcome in six to 12 months, as long as you maintain other good spending habits.

Tip #3: Keep your credit balances low

Lenders like to see less than 35 percent use of available credit. Before you take out a major loan like a mortgage or car loan, pay down all of your revolving credit cards as much as possible. Don't make other big purchases at this time, like appliances. If you are using less than 10 percent of your available credit, your score will automatically receive a boost.

Tip #4: Keep old accounts open

Even if you're not using them, having a few old credit cards with a zero balance will strengthen your credit score. Length of credit history is one factor credit bureaus consider when assigning credit scores. While it may be tempting to simply close an old store revolving credit account that you're no longer using, it still has benefits to your score.

Tip #5: Don't request too many quotes

You should avoid requesting too many quotes for loans or mortgages over an extended period of time. Too many inquiries for loans can lower your credit score. However, Canadian credit agencies treat several inquiries for a mortgage or auto loan within 45 days as a single hard inquiry. They understand that smart shoppers want the best rates. If you stretch out your comparison period for longer than 45 days, however, you run the risk of lowering your score.

Tip #6: Pay off high interest credit accounts first

Prioritize paying the higher-interest accounts that you have over lower-interest ones. Not only will you save money over the long run, you will pay off balances more quickly, boosting your credit score.

Tip #7: Apply for and use a secured credit card

If you have no credit history or poor credit, one of the best ways to raise your credit score is to apply for and use a secured credit card and pay it off every month. Within a few months, you will certainly see a better score.

If you have a modest amount of credit cleanup to do, you can start to see improvement in your credit score in as little as three to six months. More serious problems like 90-day late payments, multiple late payments, or a high credit utilization rate (over 50 percent) can take a year or more before you see significant score improvement.

Find out which credit cards, including secured credit cards, are available to you by using Kanetix.ca's online comparison tool. Using the tool to search for the best credit cards won't affect your credit score and you'll learn more information about your credit choices.