After publishing my first article about divorce and credit score I have received a lot of calls and e-mails with questions on how to improve one’s credit score in simple and manageable way. After 9 years of banking experience I would like to share my top seven tips on how to boost your credit starting from today.
1) Check your credit report with Equifax (www.equifax.ca) and TransUnion (www.transunion.ca). This will reveal any errors and “forgotten” items. You may find your secured debts never been discharged or collection notice filed against you (that’s not even You) or an old card still outstanding.
For a fee of about $25.00 you can not only get a report instantly online, but also see your Beacon score (ex: 540-840);
2) De-clutter small balances by paying them off and close cards you rarely use; Department stores are the worst when it comes to client credit management. Since you don’t have a financial advisor at Future Shop or Best Buy, don’t expect a phone call about your stereo bill being past due.
3) Pay minimum on time. If your credit card and bank account are at the different banks, always allow time of 5 business days for processing;
4) Keep your credit card and bank account with the same bank. First, you would always see them together when doing online banking transactions, so it’s less chance you forget about them.
Secondly, your bank would likely be more lenient to you due to relationship factor. At least someone can pick up the phone to call you on the past due bill;
Thirdly, you can “transfer” funds from bank account to credit card and transaction would be instant vs. “paying the bill” transaction from another bank;
5) Stay away from max authorized limits as far as possible. If you are too close to the max limit ask for credit limit increase.
It’s better to owe $2,000 on the card with $5,000 limit, than $1,900 on a card (or credit line) with $2,000 credit limit;
6) Keep third-party credit checks to an absolute minimum. Every “punch” can take from 20-30 points off your Beacon Score and 5 checks close to each other in time can bring your excellent credit to below normal in just one week.
Yes, it will eventually refresh to the normal standing, but if you are applying for credit, the bank would keep your “first” record on file for three months and it will take huge effort to overcome this issue.
Beware that cell phone companies, landlords and some employers would check your credit before offering you a job..
7) No NSF cheques please! NSF cheques are not reported to credit bureau, but stay on file with the relevant bank and affect your internal credit history. CIBC, for example, would disqualify you for their fantastic mortgage refinance program if you had one missed mortgage payment in 12 months. It would not matter if you paid it two days later. The mere fact you were negligent the day of the payment will affect your perfect standing with the bank