A good credit score is typically one of 700 or more, but most Canadians have a score of around 600. A higher credit score shows that you successfully borrowed money in the past whether it be a home loan or a car on credit and made reasonable efforts to pay it down or off. If you’re one of the millions of people who have a score far below 600, you shouldn’t worry. You can repair your credit score in a number of ways, including:
- Paying off debt
- Catching up on missed payments
- Paying creditors on time
Why Should I Repair My Credit Score?
No matter how much money you have in the bank, you probably don’t have enough to make a larger or more expensive purchase. Do you have the funds available to buy a home or get vehicle auto finance? Dealerships either have an in-house financing company or work with another financing company. You make a down payment on a car, and the company agrees to loan you the rest. A lower interest rate means you’ll pay back less in interest as you pay off your car, while a higher interest rate can leave you paying thousands in interest. By repairing your credit, you can get that lower interest rate.
How Do I Repair My Credit?
Start repairing your credit by sitting down with your bills and a copy of your credit report, or even take out bad credit auto financing. Determine which debts have the highest interest rates, and look for ways to pay off that debt. Even if you can only send an extra $10 to $20 every month, you can work on lowering that debt. This also increases your debt to credit ratio, which shows others that you are a responsible consumer.
The next step involves bringing your bills up to date. Many utility companies now report your accounts to the credit reporting agencies, and being even one month behind on your cable bill can lower your credit report. Those with the best credit scores are those who consistently pay their bills on time. Repair your credit score by making any past due payments and bringing your accounts up to date.