6 Strategies to Boost your Credit Score and Secure Better Rates

When it comes to securing a loan with favorable terms and lower interest rates, your credit score plays a key role. A higher credit score not only increases your chances of loan approval but also grants you access to better rates and terms. If your credit score is on the lower end (less than 660), you’re likely aiming to improve your credit. Here are a few steps you can take.

Improving your credit score takes time and depends on many factors. Generally, individuals with no credit history can boost their scores faster than those with poor credit.

For those with No Credit History: If you're new to credit, simply using credit responsibly—making timely and full payments each month—can rapidly elevate your credit scores.

For those with a Poor Credit History: If your credit scores suffer due to past financial missteps like missed payments or bankruptcy, it may take longer to increase your credit score. This process could span several months or even years, dependent upon the severity of past issues and your ongoing responsible credit usage.

The fastest potential improvement timeframe for credit scores typically aligns with the credit reporting cycle, occurring roughly every 30-45 days.

Here are some common strategies for quick credit score improvement (within 30 days):

1. Ensure Timely Full Debt Payments: A significant portion of your credit score, around 35%, is influenced by your payment history. Paying off debts and bills punctually and completely can quickly boost your credit scores.
2. Maintain a Low Credit Utilization Ratio: Strive to utilize no more than 30% of your credit card limit to expedite credit score enhancement. Keeping your debt-to-credit ratio low, preferably below 30%, can yield a rapid increase in credit scores, sometimes by as much as 200 points.
3. Rectify Credit Report Errors: Identify and address any inaccuracies in your credit report promptly. Once disputed, credit bureaus, such as Equifax and TransUnion, typically investigate and rectify errors within 5 to 30 days, potentially resulting in an immediate score boost.
4. Seek Increased Credit Limits: Requesting higher credit limits on existing accounts can lower your debt-to-credit ratio, positively impacting your credit scores upon the next update.
5. Negotiate Payment Plans with Creditors: For debts in collections, negotiating repayment plans may mitigate their adverse effects on credit scores. Even partial payments can potentially improve scores over time.
6. Leverage Authorized User Status: Becoming an authorized user on someone else's credit account could expedite credit building, particularly if the primary account holder maintains a positive payment history.

Canadian Credit Score Ranges: In Canada the range is anywhere between 300 (for those just starting to build credit history) up to 900 points (the highest score that can be attained). With that scores over 680 should qualify (the borrower) you for loans and mortgages. While those coming in at less than 680 points will likely have a harder time and will not likely attain favourable terms and rates.

• Excellent (Scores 760+)
• Very Good (Scores 725-759)
• Good (Scores 660-724)
• Fair (Scores 560-659)
• Poor (Scores 300-559)

The higher the credit score, the lower rates and more favourable terms will likely be secured. A credit score over 800 will likely get the best rates available and have no issues getting approved, if your finances pan out and there aren’t any other red flags.

Increasing your credit score to 800 takes time, commitment, and healthy credit repayment/usage habits.

Regardless of where you fall on the scale, it is important to review your debts to see if there are any ways to make improvements that will over time improve your credit score. Depending on your situation, it could be as little as a few months to improve your credit score, allowing you to enjoy better rates and an easier mortgage application process. While the journey to improving credit scores varies for everyone, proactive measures can yield tangible results in a matter of months. Committing to healthy credit habits is vital for continual progress and long-term financial well-being. 

For more tips on increasing your credit score to secure better rates, or for any mortgage advice, call me today!

Malik Yar
Mortgage Agent Level 2
289-828-0558
1-877-38LOANS x 426
malik.yar@sunlitemortgage.ca