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Question:

How can I build a good credit history?

Answer:

Whether you are thinking about getting a mortgage for a new home, a loan for a new vehicle or a credit card to use in emergencies, your credit is a necessity of life.

To help build good credit rating and a good credit score, follow these steps:

  1. Pay your bills on time. Even if a company allows a grace period, don't use it. It lowers your credit score.

  2. Own a lower number of credit cards. Fewer cards shorten your credit history; more cards indicate you are financially stretched.

  3. Keep your debt-to-income ratio under 20 percent.

  4. Pay more than the minimum required on your credit card, or pay off your entire balance if possible. Not only do large credit card balances hurt your score, the interest rate on credit cards is exorbitant.

  5. Request copies of your credit rating and credit score from Canada’s two major credit reporting bureaus: Equifax and TransUnion. You need both, because each company may have different information. If the information on either credit history is wrong, correct it immediately.


With cash transactions slowly becoming a part of history, a good credit rating is necessary to purchase major (and sometimes minor) goods. It’s important to know how to build and maintain a strong credit history so your credit works to your credit.

First, let's look at the differences between credit rating, credit history and credit score.

Your credit rating refers to your credit record or credit history. Every time you borrow money through a financial institution, credit card, store, employer or educational institution, you are making an entry into your credit record. Every time you apply for credit, the company making the loan purchases a copy of your credit record.

Your credit history is a biography of your life that was written by following the money trail. It includes date of birth, social insurance number, employers and marital status. It also includes anything in the public record, including bankruptcies, foreclosures, liens, judgments, secured loans and even financial counselling. It lists all of your debts, including the balances on your credit cards. Like a nasty tattletale, it tells how often you have been late with payments and how late you have been.

You credit score is a three-digit number that appears on your credit report. Equifax and TransUnion use a scale from 300 to 900. The higher your score, the better chance you have of borrowing money. Good scores are usually higher than 600, and excellent credit scores usually over 750.

Building and maintaining strong credit is a necessary part of life. We can help you learn how to build, improve or maintain your credit, which helps make borrowing easier. Or for those that don’t have credit (a student who just turned 18, someone who is new to Canada), we can teach them how to build credit, too. Visit us today.

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