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<\/a>Photo: GotCredit.Com<\/a><\/em><\/p>\nDO: Make sure you\u2019re building credit in the first place.<\/h2>\n
Before your lender gives you money to buy a house, they need evidence that you\u2019re in the habit of repaying debt. \u201cIf you\u2019re 30 and have never owned a credit card, lenders will be like, \u2018What’s up with this person?\u2019 They don’t know how you’re going to behave when you have access to debt,\u201d says Schieck.<\/p>\n
Luckily, you don\u2019t have to spend a fortune on your Visa to build a healthy score. If you\u2019re starting with a clean slate \u2014 for example, you\u2019ve never owned a card before or you\u2019re a new Canadian \u2014 it doesn\u2019t take long to start building a healthy score. As long as you start paying for at least a few small transactions on a credit card (whether that\u2019s a monthly internet bill or restaurant tab that gets paid off in full when you get home), you can start building good credit in less than 12 months. It\u2019s not about how big the payments are, but rather that your bills are punctually paid every time.<\/p>\n
If you recently declared bankruptcy, or have another insolvency on your file, it’s going to stay on your record for six years. This will certainly affect your credit score, but it doesn\u2019t mean you should bury your head in the sand. Following these tips will help you trend in a positive direction, so you\u2019re moving forward, not backwards.<\/p>\n
Having at least one credit card is essential to building credit, but you get bonus points for staying on top of a diversity of debt \u2014 whether that\u2019s a car loan payment, a line of credit, a student loan, etc.<\/p>\n \u201cIt\u2019s not to say that you should go and apply for debt you don\u2019t need just to have that diversity,\u201d says Schieck. \u201cBut if you\u2019ve had various kinds of debt and you\u2019re on top of payments, it helps your score because it shows you know how to handle debt in a multitude of ways.”<\/p>\n Cell phone and internet bills are also factored into your overall credit score \u2014 so don\u2019t ignore them when the monthly bill rolls in.<\/p>\n So, you\u2019re using a credit card, and maybe you have a diversity of debts. Next, it\u2019s time to check your score by pulling your report from one of the two credit bureaus in Canada \u2014 Equifax or TransUnion. There\u2019s a myth floating around that your credit score goes down every time you check it. While rates do fluctuate slightly for relatively mysterious reasons, checking your score isn\u2019t one of them.<\/p>\n The quickest way to improve your credit score is to dispute mistakes, if there are any. \u201cI encourage people to check not just their score, but read their full-on credit report, because there can absolutely be errors in there,\u201d says Schieck. Aside from misinformation (for example, they\u2019ve mixed you up with another dude named John Smith), there might be problems on your file that you didn\u2019t even know existed \u2014 like an unpaid bill from five years ago. Schieck recently disputed a modem that Bell claimed she\u2019d never returned. \u201cI ended up going through a long, lengthy process to dispute it,\u201d she says.<\/p>\n \u201cIf you find something that you\u2019re not sure about, usually you go to whoever the account was with first. If they can\u2019t help you, you go to TransUnion and Equifax to dispute it next,\u201d explains Schieck.<\/p>\n \u201cThe longer you\u2019ve had an active credit account, generally the better it is for your score because they can see a real length of history,\u201d says Schieck. Maybe you want to cut up your old card and trade it in for one with stellar Aeroplan points. The problem is that when you cancel a card you\u2019ve been successfully repaying for a long period of time, you eliminate that history and start from scratch. If you\u2019re sick and tired of paying annual credit cards fees for cards you don\u2019t want to use anymore, try calling the provider to see if you can negotiate a no-fee or lower-fee plan.<\/p>\n On the other end of the spectrum, you can get dinged anytime you open new cards. \u201cA lot of people think the more credit they have, the better their score is going to be,\u201d says Campbell. \u201cBut it can actually work against you. For example, you may have five cards, and the total spending amount on those cards is $30,000. Even if you have zero debts, a creditor could say, \u2018Well, you\u2019re a risk, because you have the potential to get into $30,000 of debt.\u2019\u201d<\/p>\n That said, if you currently have a lot of outstanding debts, it could help to increase your limit, since creditors look at the proportion of your debt in relation to your spending limit. \u201cIf you are appearing to be basically maxed out \u2014 for example, you have a $10,000 card and you\u2019re carrying $9,500 on it, then it\u2019s bad for your credit score,\u201d says Schieck. \u201cIf suddenly the credit limit goes from $10,000 to $20,000, now you’re carrying less than 50 percent, which can be a good move.\u201d But Schieck stresses that this plan will easily backfire if you max out again. If you have trouble with credit and know you\u2019ll spend it if you have it \u2014 avoid this strategy at all costs.<\/p>\n In an ideal world, you pay your bills off in full every month. Credit cards charge a lot of interest (upwards of 18 percent), so it\u2019s not in your best interest to leave high-interest debts hanging around.<\/p>\n \u201cIf you’re not, you have a bigger problem than your credit rating,\u201d says Campbell.<\/p>\n Maybe you\u2019re trying to buy a house and you happened to have a business bottom up half a decade ago. It\u2019s destroyed your credit score, even though you haven\u2019t had a discrepancy since. Can you get on the phone with Equifax and ask them to remove it from your record? The short answer is no. \u201cIt has to be a true history of what’s going on,\u201d says Campbell. \u201cIf you could negotiate it, it\u2019s really not a solid process.\u201d<\/p>\n That said, there are some strings you can pull to help you pay down debts with creditors. \u201cI’ve absolutely seen people negotiate with their lenders on individual pieces of credit,\u201d says Schieck. Unhappy with your interest rate? Ask them to bring it down. Want to dispute a missed minimum payment? Bob\u2019s your uncle! \u201cI think we often forget that we’re the customer,\u201d says Schieck.<\/p>\n<\/a>Photo:\u00a0Blake Wisz<\/a>\u00a0on\u00a0Unsplash<\/a><\/em><\/p>\nDO: Have different kinds of debt (it\u2019s actually a good thing \u2014 for once).<\/h2>\n
DO: Bite the bullet and check your credit score \u2014 ASAP.<\/h2>\n
<\/a>Photo:\u00a0Icons8 team<\/a>\u00a0on\u00a0Unsplash<\/a><\/em><\/p>\nDO: Dispute any mistakes on the credit report.<\/h2>\n
DON\u2019T: Close your old credit cards with history.<\/h2>\n
<\/a>Photo:\u00a0freestocks.org<\/a>\u00a0on\u00a0Unsplash<\/a><\/em><\/p>\nDON\u2019T: Open new credit cards all the time.<\/h2>\n
\n\u201cIf you\u2019re applying for a bunch of open credit, what it tells potential creditors is that you\u2019re shopping for credit, and that doesn\u2019t look good,\u201d says Campbell.<\/p>\nDON\u2019T: Increase your credit limit just to look good (because it won\u2019t necessarily work).<\/h2>\n
<\/a>Photo:\u00a0Michael Longmire<\/a>\u00a0on\u00a0Unsplash<\/a><\/em><\/p>\nDO: Pay off outstanding debts in full, if you can.<\/h2>\n
DO: If you can\u2019t do that, always, always, pay at least the minimum.<\/h2>\n
DON\u2019T: Try to negotiate with creditors to clear your record.<\/h2>\n