With how expensive many luxuries are in the modern day, getting a loan at one time or another is essentially a requirement. If you want to buy a home, go to university or purchase a vehicle, you often need to get a loan. While there are many different kinds of lenders with different terms and conditions, nearly every single one will reference your credit before agreeing to work with you.

While getting a loan with bad credit is possible, it is often much more effective to improve your credit. However, this is easier said than done for some people and can take a lot of work.

For more information about loans in British Columbia, check this out.  

Why is My Credit Bad?

Before you are able to improve your credit effectively, you need to be aware of why it is so bad in the first place. If you aren’t aware of that, you will be unsure what to change and what you need to focus on. There are several different reasons that your credit might be bad, such as:

• You are spending too much of your available credit every month
• You are not paying your credit card bills or other debts on time
• You have defaulted on a loan in the past
• You have filed for bankruptcy
• Applying for several types of new credit in a short period of time

Once you start correcting these issues, as well as doing things such as using credit effectively, you should start to see an improvement in your credit. While it won’t happen overnight, of course, you should see improvements in only a few months.

Take a look at this infographic to see how bad credit can affect your daily life.

Changing Spending Habits to Improve Credit

Unfortunately, if a person finds themselves struggling with finances and bad credit once, there is a good chance it might happen again. As a result, you need to make real and lasting changes if you want to see your credit improvements last well into the future. A big part of this is to change your spending habits.

Read this to know how ongoing debt could affect you.

Consider Total Credit Limit

First of all, you need to do your best to keep your credit usage at or below 30%, as this shows you can use credit responsibly and are in no danger of maxing out your cards, which can also be bad for your credit score.

What is your debt-to-income ratio and how do you calculate it? Find out here.  

Track It

Next, you should make sure to track your credit card spending every month, to ensure you aren’t overspending without knowledge. Also, look at your budget and see what you are spending too much on (such as entertainment, cable or eating out) and try cutting back on that. Without changing your spending habits, improving your credit becomes a lot more difficult.

Want to learn more ways to improve or fix your credit score this year? Try reading this.

British Columbia Credit Score Ranges

What’s On a Credit Report in British Columbia?

While most of us refer to our credit score to look at the health of our credit, our credit report is actually a much better indicator. While a credit score is a snapshot of our overall credit health, a credit report is much more detailed and features a lot more information. A credit report is primarily used to help lenders see how risky or safe a person is to lend money to.

A credit report includes a lot of important information such as:

• Your personal information such as name, date of birth, address, telephone numbers, SIN and more
• All the credit card accounts you have had, as well as all of the transactions made on those cards
• Cell phone and internet service accounts that you have or had
• “Black marks” which are accounts that have been closed due to fraud
• Accounts that you have defaulted on
• Credit requests and credit accounts that are currently in collections

You should also be aware of how long certain information can stay on your credit report. For example, if you go bankrupt, that will show on your credit report for 7 years, and will definitely have a negative impact on your credit. You should also know who can view your credit report, a list that includes lenders, banks, credit card companies, landlords and even potential employers.

Click here to find out how you can get a free annual copy of your credit report.

Improving Your Credit Made Simple

Improving your credit isn’t always simple and easy, but with Loans Canada, it can be. We can help you get on the right path to better credit through education and setting you up with the right products or loans you need to improve your credit easily, check out your options here.