The Government of Canada has increased the wage subsidy from 10% to 75% in an effort to financially support businesses affected by COVID-19.
Credit Improvement Edmonton
Save time and money with Loans Canada
Written by Bryan Daly
Best Credit Improvement Edmonton 2020
The health of your credit is important, especially if you’re planning to use a credit card, purchase a car, or mortgage a home someday. This is true enough in Edmonton and the rest of Alberta, where general living costs are higher than the rest of the country.
Unfortunately, having bad credit may only add to those costs. So, to ensure that you save as much money as possible when it comes to your credit products, it’s essential to make sure your credit is in good standing. Keep reading if you’d like to learn how this can be accomplished.
Check out this infographic to see how bad credit affects your daily life.
Habits that Lead to Bad Credit
Another unfortunate thing about bad credit is that there are quite a few unhealthy habits that can lead to it. While most of those habits are avoidable, some people don’t know exactly how to avoid them. Nonetheless, understanding where things can go wrong is a good first step toward credit improvement in Edmonton.
Your introduction to the world of credit is likely to come in the form of a credit card. Simple to apply for and even easier to make purchases with, you’ll become a credit user the moment you make your first purchase. Your card provider, otherwise known as your lender, will send the information to Canada’s two main credit bureaus (Equifax and TransUnion). Both bureaus will then compile a slightly different version of your credit report, which lists all your credit-related transactions over several years.
Each bureau will also assign you a credit score, which ranges from 300 to 900 and fluctuates according to your credit usage. For instance, if you make a credit card payment on time and in full, this will have a positive effect. The closer your score is to 900, the better your credit is considered and the easier it will be to get approved for future credit products with low-interest rates.
Click here to learn about the two versions of your credit score.
Then again, because credit cards are so easy to use, many borrowers overspend and get themselves into trouble. Every payment that you’re late or short on or miss entirely will decrease your score, making you less creditworthy. The further your creditworthiness drops, the harder it will be to get approved and the more interest you’ll pay over time because future lenders will consider you a borrowing risk. A similar effect can be seen with any credit product that gets reported to either bureau. Sadly, defaulting on payments isn’t the only way your credit can be damaged.
Here are a few other things that can ruin your credit:
- Applying (and being denied) for too many new credit products within a short period of time
- Carrying too much debt and reaching (or going over) your available credit limit
- Not paying full credit card balances
- Leaving uncorrected errors on your credit report
- Fraud and identity theft
Breaking Down Your Credit Score
Another way to learn about credit improvement is to understand the elements that factor into the calculation of your credit score, which is helpful considering they’re related to many of those same habits above.
Payment History (35%)
The largest percentage of your credit score is your payment history. While one late or missed credit card payment won’t damage your score too badly, a string of them can be detrimental to it. In addition, most prospective lenders like to see a positive payment history before they’ll feel comfortable approving you.
Read this if you’re falling behind on credit card payments.
Credit Utilization (30%)
The money you owe also places a significant role. The more unpaid debt you have and the longer you carry it for, the lower your score gets. This is a particular problem for products with revolving credit limits. Be sure to use no more than 30 – 35% of your available credit and make full payments whenever you can to see the best results.
Credit Length (15%)
Although it’s dangerous to misuse credit products, it’s also better to keep them active for as long as possible in an effort to build a positive credit history. For instance, it’s better to use the same credit card for extended periods than it is to constantly cancel and apply for new ones.
New Inquiries (10%)
Another reason it’s not good to apply for too much new credit within a short period is that each time you apply, your lender may check your credit report. Each check performed by a credit provider adds a ‘hard inquiry’ to your credit history, which will stay there for several months and decrease your score slightly. This is particularly harmful when you already have bad credit and keep getting denied. If this is the case, always wait a few months between applications and try to improve your credit during that time.
Credit Diversity (10%)
If a simple credit card isn’t improving your credit score fast enough, it might help to add a variety of credit products to your report (for more information about credit variety, click here). While credit cards can be good, throwing a loan or line of credit into the mix is even better, as long as you’re using all your products responsibly. After all, positive credit activity means a positive credit score.
The Different Credit Score Ranges
As we said, one of the healthiest habits you can practice is to regularly monitor your credit report. You’re even entitled to one free yearly copy of your report with either credit bureau. That said, it’s equally important to keep track of your credit score, which you can request for a small fee.
Interested in accessing your free yearly credit report? Look at this.
Remember, your score is somewhere between 300 (on the low end) and 900 (on the high end). What you might not understand, however, are the actual score ranges that help identify what level of credit you have. Don’t worry, we’ll explain each range so you’ll know what we mean.
Good Credit (660 – 900)
If it’s rare that you miss a payment and you’ve got a decent history of credit usage, your score should fall somewhere within this range. If you’re a strong credit user, most lenders will be happy to approve your applications. This is the best range to be in if you’re applying for more expensive products, such as car loans and mortgages. Good credit will also earn you the best interest rates and help you save money over time.
Check out these surprising perks of having a good credit score.
Moderate Credit (560 – 659)
In this range, you’ll slowly find your approval results diminishing and your interest rates climbing. While the majority of lenders will still approve you for a reasonable amount of money, they’ll also recognize that you’ve likely defaulted on a few payments. Although most credit cards will still be within reach, you might not be approved for a product as large as a mortgage or car loan, at least not without a significant interest rate hike.
Bad Credit (300 – 559)
Being in this range often shows that you’ve had a lot of trouble with paying your debts as scheduled, or that you’ve gone through recent financial delinquency, such as a bankruptcy. It can also mean that there are uncorrected errors on your credit report or that your identity has been stolen.
Either way, you’ll be considered too risky for most prime lenders (banks, credit unions, etc.) to approve. At that point, your only choice might be to apply with a private, alternative or bad credit lender. While some credit products will still be available to you, they will be the most expensive ones on the market due to their high-interest rates.
Look here for some more information about bad credit.
Credit Building Products and Programs in Edmonton
While a bad credit product can be more expensive, it can also be good for your credit score, as long as you’re using it responsibly. In fact, one of the best ways to improve your credit score is by simply reversing your unhealthy financial habits. Pay your bills on time, deal with any high-interest consumer debt that’s plaguing you, dispute errors on your credit report, and make more than minimum payments when possible.
However, if improving your financial habits isn’t working fast enough, there are also a few other products and programs that can help you build your credit, so it will no longer be an issue when applying.
- Secured credit cards
- Debt consolidation loans
- Bad credit loans
- Guarantor loans
- Credit counselling
- Debt consolidation program
- Credit rehabilitation savings program
Credit Improvement With Loans Canada
Building and improving your credit isn’t always easy or convenient, but it’s always worth the effort. If you’re interested in accomplishing that goal, there’s no better place to start than right here at Loans Canada. Contact us today to jumpstart your financial future.