Have you ever tried to get approved for a loan with bad credit in Manitoba? It’s pretty tough, if not impossible.
Your credit plays a crucial role in your overall financial health. If you have bad credit or none at all, you’ll find it very difficult to secure any type of financing or credit in Manitoba, including home loans, personal loans, auto loans, and debt consolidation loans, to name a few.
That’s why credit improvement Manitoba is so important. By identifying what’s pulling your score down and taking the necessary steps to improve it, you’ll be in a much better position to obtain the types of credit you need in the future.
What is the Purpose of a Credit Report?
The reason for credit reports is to provide lenders and creditors with information about consumers to determine their creditworthiness or potential to be risk level. Credit bureaus collect relevant information and include it on your credit report.
Consumers in Manitoba are also able to pull their own credit reports to identify where they stand as far as their credit health is concerned. It’s also an opportunity to help consumers identify if there is any suspicious activity that would point to the potential for identity theft.
Want to know how to check your own credit report for free? Click here for the answer.
What Factors Affect Your Credit Score in Manitoba?
No matter where you live in Canada, including Manitoba, your credit score is calculated based on 5 specific factors:
If you’ve made a late payment and need to rebuild your credit, try reading this.
Credit utilization. This also plays a key role in the calculation of your credit score, it’s the amount of credit that you have used relative to what your total limit is. If you owe $4,000 on your credit card with a limit of $5,000, for instance, then your credit utilization ratio would be 80%, which is way too high.
It’s recommended that your credit utilization stays under 30% in order for your credit score not to be negatively affected, despite timely payments.
Length of credit history. The health of your credit score is also dependent on how long you’ve been using credit. The age of your oldest account and the average age of all of your accounts influences your credit score.
Check this out to learn about your credit history and how it affects your credit score.
Having old accounts can be very helpful for your credit score. That said, a short credit history can also be OK, as long as you make payments on time and don’t have too much debt on the books. That’s why it’s advised to leave old credit card accounts open, even if they are not being used.
New credit applications. The number of new accounts that you’ve opened is also an important and often overlooked factor. Generally speaking, opening up too many new accounts within a short time period is not good for your credit score. That’s because each time you apply for new credit, lenders will do a “hard inquiry,” which involves pulling your credit report and checking your credit information.
Types of credit. Having a good mix of credit is good for your credit score. For instance, credit cards, mortgages, auto loans, and other types of credit can help your credit, as long as you make timely payments.
Now that you know what factors affect your credit score, it’s important to make the necessary adjustments for credit improvement in Manitoba. Many habits are good for your score, such as making timely payments. But other habits can pull it down, such as:
- Using your credit to pay for everything, thereby increasing your credit utilization
- Applying for too many store credit cards, causing hard inquiries
- Cancelling old credit cards
- Not paying your bills on time
- Carrying too much debt
Making the necessary changes to your financial habits can determine which direction your credit score will head in.
What Information is On Your Credit Report?
Your credit report contains lots of important information that creditors and lenders in Manitoba want to see as part of their verification and approval process.
Information that can be seen on your credit report includes:
- Your name
- Your birth date
- Your current and previous addresses and telephone numbers
- Your current and previous employers
- Your social insurance number (SIN)
- Your driver’s license information
- Your passport number
- Your credit accounts and their transaction information
- Cell phone accounts
- Black marks, such as fraudulent activity on your accounts
- Bounced check information
- Bankruptcies, judgments, liens, and collections
- Hard inquiries from creditors
What’s the Difference Between a “Soft” and a “Hard” Inquiry?
When you apply for a loan, the lender will pull your credit report in order to determine your creditworthiness. This is considered a “hard inquiry” and can cause a temporary small drop in your credit score.
On the other hand, a “soft inquiry” occurs when consumers themselves pull their own credit report. These inquiries don’t have any effect on your credit score.
For more information about credit inquiries, look at this.
Changing Your Habits For Credit Improvement in Manitoba
Your spending habits and other financial behaviours have an impact on your credit score. What you do with your credit is crucial, so developing proper spending habits is important when it comes to credit improvement in Manitoba.
There are professional services available in Manitoba to help you improve your credit score, but there are things you can do yourself without the assistance of experts that can help your score increase over time:
Create a budget. To keep your debt within reasonable limits, it’s important not to spend more than what you earn. That’s why credit cards can be dangerous tools if you’re not good at monitoring your spending. But having a budget in place can help you identify exactly how much money is being spent compared to what you’re bringing in. Stick to the budget in order to ensure you don’t spend more than you make.
Boost your income. If possible, consider taking a side hustle to help you reduce your debt. Having too much debt is not good for your credit, so anything you can do to cut it down can be very helpful. Bringing in a little more money every month can be put toward reducing high-interest debt.
Use cash instead of credit. It can be so easy to pull out the plastic in order to make a purchase. But if you’re not careful, you can rack up your credit card bill pretty quickly. And since credit card debt typically comes with high-interest rates, you can inadvertently cause your debt to skyrocket. Instead, consider carrying cash with you when you go shopping. That way you don’t spend any more than what you actually have, which can keep your credit card bill down and easier to pay off.
Want to increase your credit score without increasing your credit card debt? Click here to learn how.
Pull your credit report to check for any errors. Your credit report has a lot of information on it, including potential errors. Sometimes credit bureaus include information that’s not entirely accurate, which can cause your credit score to tumble. It’s a good idea to pull your credit report once a year to check for any errors on it. If you spot any, make sure you report them and have them investigated and rectified.
Credit Building Products in Manitoba
In addition to developing better habits to help boost your credit score, there are credit building products available to help in this department. If you’re having trouble with credit improvement in Manitoba, consider applying for any one of the following products to help.
Secured credit card. If you are unable to get approved for a traditional credit card in Manitoba, consider applying for a secured credit card. These require collateral in the form of an upfront cash deposit, which essentially becomes your credit limit. Since you’ve already paid for what you’re going to be spending, there’s no way for you to be unable to repay your debt. It’s already been covered.
These are great tools for those who have no credit and are just building it from the ground up. By making timely payments every month, you can build good credit thanks to a secured credit card.
Credit counselling. If you have no idea where to start when it comes to repairing your credit or building good credit, consider credit counselling. An experienced and trained credit counsellor will work with you to help you improve your credit score.
They’ll look at your current situation and your credit report and make recommendations for what you should do to repair your score. They may even work with you to negotiate with your creditors to see if your overall debt load can be reduced, or if your interest rate can be slashed to make your debt easier to pay down.
For further information about credit and debt counselling, look at this page.
Debt consolidation program. If you have many different loans to deal with, a debt consolidation program can help. This program involves taking out one big loan to pay off several smaller ones. Usually, a debt consolidation loan comes with a much lower interest rate, making the debt amount easier to pay off. And because you only have one loan payment to deal with, managing your debt can be a lot easier for you.
Click here if your debt consolidation loan application was denied.
Credit rehab savings program. This type of program provides a unique way to repair your credit and save money and you’ll be accepted with no credit or bad credit. A credit rehabilitation savings program lets you save money while repairing your credit score. There are no fees to get started and it’s affordable. You won’t get any cash up-front, but you can gain access to your savings during the loan term based on the amount of equity you’ve built up.
Wondering how to access your home equity this year? Try this.
Frequently Asked Questions
Will checking my credit affect my credit?
Can I cancel my credit card to improve my credit score?
Does more available credit mean a lower credit score?
Need Help Repairing or Building Your Credit in Manitoba?
Repairing your credit takes some hard work, dedication, and even a little bit of sacrifice. But it’s well worth it in the end when you have a healthy credit score that can afford you many credit programs out there. To get some help building your credit, consider a credit program. Get in touch with Loans Canada today to help you choose the right program for you for credit improvement in Manitoba.
