If you are looking to secure a new car, a home, or go back to university, you likely need the help of a loan. However, if the only loans you are able to qualify for are high interest or feature incredibly strict rules, it can be demoralizing.

One of the biggest reasons for high-interest loans or strict guidelines is a borrower with questionable credit. As a result, if you are only able to qualify for these types of loans, there is a chance your credit could use some improvement.

Click here to learn more about loans in Alberta.  

Factors That Affect Your Credit Score

Before being able to improve your credit in a deliberate and meaningful fashion, you need to understand the factors that go into determining your credit score. Your credit score is calculated by looking at five different factors.

Payment History (35%)

One of the biggest factors that go into figuring out your credit score is your history of payments. Having a lot of missed payments or late payments will hurt your score, while always paying your bills on time will help. Recent wrongdoings are often taken more seriously than wrongdoings in the past, as well.

Need to bounce your credit score back from a late payment? Take a look at this.

Debt (30%)

The more debt that a person has, the riskier it is to lend to that person. If you are already spending thousands on various debts each month, many lenders might fear that adding any more will lead you to start defaulting on your loan.

Check out our debt timetable to see how ongoing debt could affect you.  

Credit Length (15%) 

The longer your positive credit history is, the higher your credit score will generally be. Anyone can pay back their credit for a few months or a year, but if you have several years of good credit usage, it is usually a good sign that you are relatively safe to lend to.

Is it better to have no credit history or a bad one? Find out here.

New Inquiries (10%)

If you are consistently applying for new credit, it can have a negative influence and effect on your score. This is because if you apply for a lot of new credit rapidly, it could mean that you are in financial trouble and need some help.

Diversity of Accounts (10%)

It is good to diversify your credit type so that you show you are capable of handling different types of credit effectively.

Alberta Credit Score Ranges

Habits That Are Ruining Your Credit

Knowing the factors that make up your credit score is important, but it’s useless information unless you are able to connect them to real life habits that might be ruining your credit. For example, if your payments are constantly late or you are missing them regularly, you need to get that in check to have any hope at a good credit score.

Having trouble making your loan payments? Here’s what to do.

Other habits that are potentially destroying your credit situation are:

• Spending impulsively
• Overlooking errors on your credit report
• Closing old credit cards
• Taking on more debt than you can handle
• Carrying a large balance each month
• Maxing out your credit cards

Simply put, if you want your credit report and credit score to improve, you need to correct the bad financial habits you might have. All the knowledge in the world won’t do you very much good unless you are able to apply it in the real world.

Are you a credit user in need of a debt management product? Check this out.  

Credit Building Products in Alberta

While there are many guides and information out there about improving your credit on your own, it isn’t always easy. Thankfully, there are a variety of different credit building products out there that can help you build your credit up to a reasonable level. You can easily apply for these and if you use them correctly, they should improve your credit score.

Secured Credit Cards

A good example of this is a secured credit card. This is a type of credit card that requires a cash collateral deposit. So it works just like a regular credit card, but you need to show you can pay it off before using it. It is a good way to build credit by simply treating it like a normal credit card.

Is there a difference between a secured credit card and a prepaid credit card? Find out.   

Credit Counselling

In addition to these products, you can also attend credit counselling, which has been effective for many people. Your credit counselor will teach you not only how to improve your credit, but also how to ensure you make the right changes to keep yourself from relapsing back into bad habits that ruin your credit.

For more ways of improving your credit in 2018, look here.

Helping You Improve Your Credit

Having trouble building and improving your credit on your own? If so, Loans Canada is here to help. We offer a wide variety of credit improvement products that can help you build the credit score you need, check them out here.