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For many borrowers in Quebec, it will be necessary one day to apply for a personal loan, credit cards, or even a mortgage. While any of these products can be harmful to your finances when not managed properly, they can certainly benefit you when you use them responsibly.
Want some more information about loans in Quebec? Look for it here.
Credit improvement is essential when you’re trying to live a healthy financial life. Having bad credit not only makes you look like an untrustworthy borrower, but it also causes high-interest rates and worse, potential debt in the event that you do manage to secure a credit product of any kind. So, before you start applying for any credit product and are looking for help with credit improvement in Quebec, we have the advice you need.
Elements that Damage Your Credit
Before we delve into the ways you can improve your credit in Quebec, it’s best to learn about the habits that can harm it in the first place. This way, you should be able to fix your credit once it’s been damaged and hopefully improve your financial habits in the future.
- Making late or short payments, missing payments completely or defaulting on your loan in some other way, particularly when it comes to your credit card bills.
- Your credit utilization ratio (the amount of debt you carry vs. your available credit) is too high. It’s recommended that you stay below 30-35% of your credit limit.
- Carrying too much debt in general, spread over many accounts. Make sure to learn about your debt-to-income ratio.
- Applying for new credit numerous times within a few months, as every hard inquiry into your credit report drops your credit score by a few points.
- Filing for consumer proposals, bankruptcies, and other financial delinquencies.
- Not correcting any errors you may have missed on your credit report.
- Cancelling old credit cards and applying for new ones just because they offer “perks”. The older and healthier your credit accounts are, the better.
Want to know what kinds of people can see your credit report? Find out here.
Credit Score Ranges
One of the best ways to help with credit improvement in Quebec is to know what qualifies as a good and bad credit score. Your Canadian credit score ranges from 300-900 and is one of the main ways that a lender can judge your creditworthiness.
Good Credit Score (680 – 900)
A credit score of 680 or higher means you have good credit, along with the best chances of approval and the lowest interest rates for any future credit products. While you can still be approved if your score is lower than 680, your approval chances and interest rate could be worse, particularly on more expensive products, such as mortgages and car loans.
Click here to learn what the minimum credit score for mortgage approval in 2018 is.
Bad Credit Score (300 – 620)
When your score falls below the 620 mark, you’ll be entering the bad to terrible credit range. If you are at that level and need a loan (or other product) quickly, don’t worry, there are plenty of bad credit lenders in your area. However, before you apply for a bad credit product, it’s once again important to factor in the probability of higher interest rates and more strict payment terms. Understandably, your lender needs to take the proper precautions when lending to a client who, at least in their eyes, may have trouble keeping up with their payments.
Information Contained Within Your Credit Report
A credit report is a collection of all your credit-related activity over a certain number of years. You can request a free yearly copy of your report from either of Canada’s two main credit reporting agencies (Equifax and TransUnion). Doing this is a good way of checking your financial health and dispute any incorrect information that may also be damaging your credit score, both of which can help if you’re interested in credit improvement in Quebec. Lenders may also examine your report whenever you apply for a new credit product, such as an installment loan, to judge your approval chances.
Read this to know how long information stays on your credit report.
Lenders will also use your credit health as a basis for which to calculate the interest rate they’ll give you, if and when they approve your application. Some other elements contained within your report include your:
- Personal profile/information
- Credit score (which you yourself can request for a small fee)
- Credit rating
- Payment history
- Record of delinquency (if any)
What’s the difference between your credit score and rating? Discover the answer.
Factors That Affect Your Credit Score
Changing Your Spending Habits For the Betterment of Your Credit
If your credit needs a lot of improvement, don’t worry. It’s always possible to reverse your bad credit situation. However, it does take a lot of hard work and dedication. Here are some changes in your spending habits that you should be committed to:
- Paying all your credit account bills on time and in full – This includes credit cards, lines of credit, mortgages, or any other credit products you’re actively using. Any of these products can come with a steep penalty for any short, late or missing payments.
- Increasing your income – Asking for a raise or finding a second job, while not always convenient, can be extremely beneficial when you’re trying to stay out of debt and keep your credit healthy.
- Creating a proper budget – If your unhealthy credit is caused by financial disorganization, you can stay on track is by budgeting efficiently. Your budget should contain all your regular monthly expenses, even if some of those costs are only estimations. This will also help you decide which credit products will benefit you and which ones only cost you more.
Need more debt management tips? Take a look at these.
Products For Credit Building and Credit Improvement In Quebec
Often enough, improving your damaged credit is easier said than done. Your own credit may have even gotten to the point when fixing it by yourself is not a possibility. In that case, there are a few credit building and improvement products in Quebec that you can take advantage of, including but not limited to:
- Secured credit cards
- Credit Rehabilitation Savings Programs
- Credit counselling
How is a secured credit card different from a prepaid credit card? Find out here.
Will canceling my credit card improve my credit?
How can I improve my credit when I can’t be approved for anything?
Do credit checks affect my credit score?
Need to Improve Your Credit? Start Today With Loans Canada
If you’ve been looking for ways to build or improve your credit in Quebec, we have good news for you! The Loans Canada Team is always around to help you get connected with the right debt management solutions and credit improvement products for your needs.