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Tips to improve your credit report

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Guest blogger Leanne Salyzyn is an insolvency counselor, licensed restructuring professional and trustee in bankruptcy. Post a comment or contact her on Twitter with your personal-finance questions.

In today’s world, we need credit to buy the things we desire. Rarely do you hear someone buying a home, a car or paying for a vacation with cash. Credit provides us the opportunity to fulfill our wants now instead of waiting. Credit begets credit. The better the credit history, the greater chance you will obtain more credit and at good rates.

Credit bureaus collect information on you and report this information to their subscribers (members) in a report format. This information details your credit, payment history, credit inquiries and other personal information about you. Lenders view this information and determine how much credit risk you present.

But what if your history has seen its share of ups and downs? Can it be repaired? Yes, with a few simple tips.

On time & in full

It’s important to pay your bills when they come due and pay debts in full instead of paying partial amounts. Late payments can affect your credit score. Be aware of due dates and plan all payments accordingly. The responsible use of credit can improve your credit score over time.

Be stable

Credit lenders like stability. Working for the same employer for a period of time and living at the same address shows that you are consistent. In most cases, this equates to less credit risk.

Avoid collections

Delinquent debts do get reported to the credit bureaus. Bad debts, collections agencies and judgments will affect you getting credit in the future. It’s important to pay or settle all outstanding debts to rebuild your credit history. You must repair the past before you can consider the future.

Don’t over shop for credit

If you apply for too much credit within a short period of time, lenders may see this as “shopping for credit” which is one indication of financial difficulties. Limit the number of credit inquiries by pacing your credit applications. Time is a great healer.

Don’t max your limit

Stay below 75 per cent of your available credit limit. If your credit exceeds this amount, it can bring down your credit score. Most individuals who max-out their credit cards each month live beyond their means. If this is you, consider meeting with a licensed debt professional to get your financial situation under control.

Do a credit check

It’s also important to review your credit rating from time to time. Outdated or incorrect information reflected on your credit history can affect you getting credit or obtaining the best lending rates. Ensure your credit information is accurate and up-to-date. Credit checks can be done through Equifax Canada Inc. and TransUnion of Canada Inc. Both offer online credit checks for a fee, as well as free credit checks if done in person.

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