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Any way you look at it, credit is important. While credit isn’t the only thing that lenders consider when evaluating potential borrowers, it is among the most critical. Having good credit will allow you to borrow money not only easier but at lower interest rates.
Unfortunately, there are many people across the country that suffer from bad credit. Bad credit can come about due to a number of different reasons, from not being able to pay down debt, spending frivolously to unexpected expenses or life events. All areas of the country suffer at times, but many areas in Ontario (like Hamilton, for example) are struggling because of high home prices and expensive cost of living.
Thankfully, there are plenty of different opportunities for credit improvement in Hamilton and the rest of the country.
Hamilton Credit Score Ranges
Before we look into credit improvement in Hamilton, we need to ensure you are up to speed on credit scores. Credit scores in Canada range from 300 to 900. The higher your score, the less risky you are in the eyes of lenders. A score of 850 will generally be able to qualify for any loan that they want, with a relatively low-interest rate compared to what someone with a score of 625 will be able to get.
Oftentimes, instead of directly mentioning a number, people will use words like “bad credit” or “good credit”. But what do those actually mean? While there is no textbook definition for them (as almost all lenders have their own specific credit requirements), there are ranges that can help you determine what kind of credit you have.
- Excellent (Scores 780+)
- Very Good (Scores 720-779)
- Good (Scores 680-719)
- Average (Scores 620-679)
- Poor (Scores 580-619)
- Very Poor (Scores 500-579)
- Terrible (less than 500)
Knowing the ranges of credit scores can help you evaluate where you sit, where you want to be, and simply help you understand more about the potentially-confusing world of credit scores. While a credit score doesn’t give a full picture of an individual’s finances, it does give a quick snapshot for lenders to evaluate a potential borrower. If you want the full story on the creditworthiness of an individual, you will need to check out their credit report as well.
To learn even more about how your credit score is calculated, click here.
What’s On a Credit Report?
While a credit score is important, it is only a brief overview of your credit. If you are serious about credit improvement in Hamilton, you need to get a copy of your credit report. Thankfully, the credit bureaus will be able to mail you your credit report for free, so you can see just how your credit looks, in-depth.
So what is actually on this credit report? A credit report will include some of your personal information such as your name, DOB, SIN, address, phone number, etc. A credit report will also have a lot of information on your credit history. This includes accounts, transactions, black marks, and things like cellphone and internet accounts.
Also, you will see a rating, for each of your credit accounts, between one and nine. One is a perfect rating and shows that everything is in order, while a rating of nine is the worst and represents bankruptcy or that the account has gone to collections.
While the bureaus do their best, there is always the chance for errors on your credit report. As a result, you should check out your report every now and then to make sure that all the information, both personal and financial, is correct.
The Habits That are Ruining Your Credit
A big part of credit improvement in Hamilton is knowing why your credit is damaged in the first place. You need to know and be aware of the habits that are ruining your credit. Some of these are large and glaring things that are easy to see and change, but this isn’t always the case. You may have some habits that are hurting your credit, without even knowing. Some habits that hurt your credit include:
- Not having a budget
- Not saving any money
- Only making the minimum payments or missing payments altogether
- Not checking your report
- Co-signing a loan for someone else
- Not having an emergency fund for when accidents happen
If you can identify any of these as a problem that you are currently struggling with, do your best to break the habit. Even by simply breaking a bad habit and keeping it up for a couple of months, should help to improve your credit. Once you have successfully been able to break the bad habits that are hurting your credit, you will finally be able to begin on your journey toward improving your credit.
Tips for Improving Your Credit in Hamilton
There are a number of things you can do to improve your credit. One of the best things you can do is to make all of your payments on time and in full. By doing this, you are showing lenders that you are not risky and are capable of maintaining your financial obligations.
Another great thing to do that can help improve your credit is to keep your credit utilization low. If you are constantly using up all of your available credit every single month, it can send warning signs to potential lenders that you are potentially at risk of not being able to fully pay off your debt if something were to happen.
In a similar vein, be sure to spend responsibly. While using your credit card is fine, you need to be sure to only use amounts that you can pay off. Use it on things you need, or things you want, as long as you can afford them. Too many people see their credit take a huge hit when they begin to spend frivolously on things that they don’t really need. While this is often big purchases, even the small daily purchases can add up over time.
Other things that can improve your credit include:
- Not closing old credit accounts
- Checking your credit report for errors or issues
- Using a variety of different types of credit
- Not constantly applying for new credit
- Fixing spending habits and utilizing a budget
While these tips and methods will certainly work for all residents of Hamilton, it is very important to be patient. Improving your credit can take months or even years, and certainly won’t happen overnight. But if you make the right choices and remain consistent with them over time, you will see your credit score and credit report look better than ever.
Check out this infographic to learn how bad credit can affect your daily life.
Credit Building Products
While some residents of Hamilton are capable of improving their own credit, others may require some assistance. There is nothing wrong with this as it isn’t always easy to build your credit without additional help. Thankfully, there are many credit building products that can help you get out of trouble and begin to build up and improve your credit quickly.
Secured Credit Cards
One such option is a secured credit card. With a secured credit card you are required to provide security in the form of a cash deposit. Often, your available credit limit is the same as the security deposit you made, but not always. You can use a secured credit card in the same way as a traditional credit card. All your payments will be reported to the credit bureaus and will help improve your score over time.
Credit Rehab Saving Program
Another great choice to consider is a Credit Rehab Savings Program. This program helps you save up a bit of money, while also building your credit. It involves you taking out a small loan, a GIC is bought with the money from the loan, then you make small monthly payments on the loan and once the loan is paid off, you get the benefits from the GIC. You establish a better credit by paying off the loan, and the GIC helps ensure you are saving.
Tackling Debt Issues
Even some debt relief solutions like debt settlement, debt consolidation, or credit counselling can help you get on the right track as well. The right solution is out there for you, and we pride ourselves on our ability to help you find it. What is right for you might not always be right for someone else, so be sure to take time to decide if you require assistance in building your credit and if so, how do you feel you want to go about doing it.
Need Help Building Better Credit in Hamilton?
If you want some more information on credit improvement in Hamilton or are interested in professional assistance in the area, be sure to reach out to Loans Canada. We will be able to answer your questions and help you improve your credit.