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What determines your credit score? There are multiple factors that contribute to determining your credit score and hold more significance than others.
All of these factors contribute to determining your credit score so it's important to consider all these elements to boost your score.
How to improve your credit score? There are a few ways to improve your credit score which is important to work towards as credit score determines the interest rates you receive and loans available to you.
Pay your bills on time. Ensure paying your bills on time and avoid late payments. This includes all payments, such as credit card, phone bills, or anything that impacts your credit score. If you are having trouble paying your bills, it is best to reach out to your lenders, instead of skipping payments. Even paying a lump sum and not just the minimum payment, will help reduce the interest for the next payment period. Avoid only paying minimum payments each month, even though this can help reduce interest on the amount you owe. Not paying the full amount owed can reduce your credit score. However, if you are unable to pay the full amount on time, paying as much as possible to reduce the credit amount due will help more than paying nothing.
Using your available credit wisely. It is best to use less than 35% of your available credit. Using all of your available credit shows lenders that you are a greater risk. This event negatively affects your credit rating even if you pay your balance in full by the due date.
Increase the length of your credit history. The longer you have a credit account open, the better your score. This shows lenders that you are reliable as you are not a newer account holder.
Limit the number of credit applications or credit checks. If you are constantly looking at your credit score, these get recorded on your credit report which is information available to lenders. This is seen as risky behaviour as lenders may perceive this behaviour as:
However, there are different kinds of credit checks: “Hard Hits” versus “Soft Hits”
Hard Hits are credit checks that appear on your credit report and affect your credit score.
Examples of Hard Hits are:
Soft Hits are credit checks that aren’t publicly shown on credit reports and are only visible to you.
Examples of Soft Hits are:
Use different types of credit. Mixing the types of credit used can improve a credit score. Furthermore, using one type of credit can decrease one’s credit score. Different types of credits, such as,
However, it is important to apply for credit that is needed and not over applying for multiple credit accounts, which can affect your credit score too.
It is important to remember to pay back any borrowed money and combine these factors to get the full benefits to improve your credit. If you are still unsure how to improve your credit, it is best to reach out to an expert to learn the best way to fix your profile.
Is there a minimum credit score to finance a car? No, there is not minimum credit score requirement to get a car loan in Canada. This means anyone with any credit score can inquire about a car. However, this doesn’t mean it will be the easiest process but there are ways to enhance one's applications to get approved. Check out this article: How to finance a car with less than perfect credit, to help boost your application to get approved to finance a car.
Autoplex Alberta is a used car dealership in Calgary. We specialized in bad credit financing with new inventory added weekly. Guaranteed approval with amazing interest rates on auto loans. Our friendly and knowledgeable staff will help guide you through our wide selection of domestic and imported used cars. The finance team will make sure you get approved in under 24 hours.
