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📅 Last Updated: October 4, 2021
✏️ Written By Bryan Daly
🕵️ Fact-Checked by Caitlin Wood

When it comes to improving your credit, finding the right products and the best techniques can seem like a daunting task. But, the good news is that there is a wide variety of credit improvement and building services and products in Calgary that you’ll be able to find a great option that fits your needs.

Why is Good Credit Important?

If you are planning to be a regular credit user, building and maintaining a good credit profile is just as important as saving and spending wisely. In fact, your credit usage and your money habits go hand-in-hand.

Your Credit Report

As soon as you activate your first credit card, you’ll start building a credit history. That history is a significant element that is contained within your credit report, a profile that Canada’s main credit bureaus (Equifax and TransUnion) will create for you when your first credit activity is reported to them by your lender.

Afterward, every time you use a credit product, the same process will occur. The information is sent to the credit bureau that the lender works with, who will update your report accordingly. That information stays in your report for a predetermined number of years. If you apply for any new credit, your potential lender in Calgary may request your report, which will help them determine the likelihood of being a responsible client. The more positive information (good payments) they see within your report, the more likely they will be to approve you for credit products with favorable interest rates.

Read this to learn how you can get your annual credit report.

Your Credit Score

Your score is a three-digit number ranging from 300 to 900. The closer your score is to 900, the better your credit is. If a lender doesn’t want to read through your entire credit report, your credit score gives them a more basic picture of how responsible you’ll be at making payments.

Canadian Credit Score Ranges

The Good Credit Range

With a good credit score (680-900), lenders in Calgary may assume that you have been and will continue to be a responsible borrower. It means you’ve had very few problems with your previous credit products or, at the very least, that you’ve been working hard to improve your credit wherever needed, which is also a positive sign. As such, you’ll be considered less risky and receive the same favorable results when you apply.

The Fair to Average Credit Range

When your credit score falls within the fair to average range (580-679), you will slowly find your approval odds diminishing, while your interest rates will start rising. This may show your lender in Calgary that you’ve missed some payments here and there, maybe had a few debt issues, or that you’re currently working to reverse such problems. Either way, when your credit score is within this range, you’ll still receive approval without much hassle. However, you might not be approved for as large of a credit amount as someone with good credit.

The Bad Credit Range

With a bad credit score (300-579), on the other hand, some lenders in Calgary may think that you haven’t been making good payments in the past. Even worse, bad credit can be the result of financial delinquency, such as a consumer proposal or bankruptcy, which they can also see in your credit report. As a result, they’ll consider you a more risky client to take on, leading to lower approval odds but higher interest rates. Additionally, you’ll be approved for a much smaller credit amount, assuming you’re approved at all.

How Did My Credit Get Ruined?

As you can see, having bad credit can prevent you from receiving a less expensive product with favourable terms in Calgary. That said, identifying the problem(s) can be a huge help, because you’ll know where you can make improvements and get back on track.

Habits That Can Ruin Your Credit in Calgary include:

  • Making payments late, short, or missing them altogether
  • Only making minimum payments for long periods of time
  • Carrying too much unpaid debt, resulting in a high debt-to-income ratio
  • Going through a debt settlement, debt consolidation, or other delinquency
  • Fraud or identity theft
  • Errors within your credit report that have gone undisputed
  • Getting too close to or maxing out your credit limit

Want to learn more about revolving debt and how to manage it? If so, read this.

What Factors Affect the Calculation of My Credit Score?

Another way to improve your credit health is by studying the way your credit score is calculated at both Equifax and TransUnion. Traditionally speaking, there are 5 components that make up your credit score.

Credit Score Calculation

Payment History (35%)

Weighing in as the most significant credit score component is the way you handle the payments for your active credit products. Whether it’s for a revolving product, like your credit card, or for something installment-based, like a personal loan, every payment you have makes an impact on your credit score.

For a more detailed explanation of your payment history, look at this.

Outstanding Debt (30%)

Otherwise known as your credit utilization, the amount of unpaid debt you have also has a large impact on your credit score, particularly when it comes to your revolving products. Essentially, the more debt you carry and the closer you get to your available credit limit, the lower your credit score will drop, and vice versa. You can calculate your credit utilization ratio by taking the amount of debt you have and dividing it by your credit limit. Try to keep your ratio below 35% for the best results.

Want to know how the money you owe affects your credit score? Click here.

Age of Credit Accounts (15%)

It’s also better for your credit score to have a few credit accounts that you’ve been using for a long time than to constantly be cancelling old ones and opening new ones. Even if you’re not using your older accounts, it’s better to leave them active. In turn, having a longer history of responsible credit usage will make lenders in Calgary consider you a less risky candidate for new products.

To see more ways that your credit history affects your credit score, check this out.

Credit Inquiries (15%)

Opening new credit accounts may damage your credit score in more ways than one. Remember, when you apply for a credit product, your potential lender in Calgary can pull your credit report to check how risky of a borrower you’ll be. When that happens, a “hard inquiry” will be listed in your report for several months and will decrease your score by a few points. While one or two hard inquiries won’t impact your score much, applying multiple times within a few months is definitely not good and may even make you look irresponsible, causing lenders in Calgary and Canada, in general, to deny your applications.

Credit Diversity (10%)

While you shouldn’t take on more credit than you can handle, having a variety of products can be good for your credit score, as long as you’re using them all responsibly. Certain products will also benefit your score more than others. It’s also good to have several types of products listed in your credit report, such as credit cards, loans, and lines of credit.

Canadian Credit ScoreTake a look at this infographic to learn even more about credit scores.

How Else Can I Build or Improve My Credit in Calgary?

Besides using your credit products responsibly, there are a few other ways you can build and ultimately improve your credit score in Calgary. While these methods can be helpful for anyone, there are better for those who need a way to fix bad credit. If that’s the case for you, check out some of the following credit building and debt management products in Calgary:

  • Credit counselling
  • Secured credit card
  • Credit rehabilitation savings program
  • Debt consolidation loan
  • Debt consolidation program

Improve Your Credit Now

If you’re planning to apply for any new credit in Calgary, it’s always beneficial to improve your credit as much as possible in the present, especially if you want to get approved for mortgages, car loans, and other more expensive products. If you need help with a credit improvement service or you’d simply like more information, contact Loans Canada today.

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