What do you understand when someone talks about your credit score? When you apply for a loan, the lenders keep saying either you have a good credit rating or a poor one or an insufficient credit history. You must have wondered what it is. A credit score is a number which quantifies your “creditworthiness”.
In Canada, lenders can easily track your past credit records using your social insurance number (SIN). Based on these past reports which tell them about the number of times you have applied for a loan, the reasons, the number of times they were approved or rejected, the number of times you defaulted or made pre-closures, they arrive at this number which is a statistical figure which indicates the likelihood that you will make the payment on time, while staying within the imposed conditions.
The higher the credit score, higher will be your chances of getting a loan approved because it would show that your past record has been good and there are less chances that you could default. Equifax Canada Inc and TransUnion Canada are the two most reputable organizations in Canada that help people calculate their credit scores and also prepare a detailed credit report.
How can you improve your credit score?
Improving a credit score overnight is not possible. This is a number which essentially captures and represents your entire credit history. You will have to be constantly vigilant that you don’t make any slipups and don’t default on credit card bill payments and loan dues due to oversight or callousness. But, if you continue to keep up the good work, you will also see that you may also get some credit cards or loans preapproved because of your consistently good track record. However, there are some easy ways in which you can slowly and steadily improve it. They are as follows-
Don’t remove the good credit records even if they are old: If you have had a solid repayment history in the past, let it stay in the credit card report even if it has been paid. Bad records can indeed hurt your chances but good, old records can actually boost your chances. Try to include as many successful loan payments from the past in your credit report as possible because they help to build up a good impression about you.
Continue to pay bills on time: If you really want to improve your credit score and brighten your chances of getting a loan, make it a point to pay all your bills and on time. There are many people who have a habit of dallying with bills on their hand. It is not always because they don’t have the money to repay the bills in their account, but simply because they feel lethargic about it. They want to test the patience of the lender and won’t pay off till they are forced. What these people fail to read is that everything gets recorded in the credit report. Next time, when they genuinely need a loan and they can establish a guarantor, a regular source of income, enough liquidity, they may still get rejected because they have a bad record when it comes to paying bills. If you apply for a Flex Loan from Cashco Financial at www.cashcofinancial.com you can rebuild your credit very fast.
Open bank accounts in your name: One extremely easy way to start building up a credit history is to open an account under your own name even if you are unemployed or a student. You can start paying off utility and household bills every month which will help you to stay within the limit and build a good credit history over a considerably long period.
Increase your credit limit: Request your lender to increase the limit of your credit card because that would help improve (i.e. reduce) your overall credit utilization ratio. Try to make small payments at regular intervals rather than making one big payment which almost reaches the limit. Try to stay as far below the card limit at each transaction as possible.
If you have a good credit score, consider yourself lucky. But, if you have an ink blot on your credit report, it’s not the end of road for you. You will have to be patient and build a good reputation again. Try to follow the best practices and you will hopefully never face a problem that you can’t recover from. Companies like Cashco Financial can help get you started in the right direction.