credit score analysis ottawa

5 Behaviours That Might Be Hurting Your Credit Rating

Just because you pay your rent on time doesn’t necessarily mean your credit score is as good as it could be. Some seemingly innocent financial behaviours can negatively affect your credit rating.

Here are some pitfalls to avoid so you can maximize your credit score.


What’s a Credit Rating?

A credit rating is a three-digit number that represents your credit risk. A typical score is between 300 and 900. The higher your score, the better your chances are of securing a car loan, line of credit or mortgage. If you have a high credit score, you may also be able to secure better interest rates.


5 Pitfalls to Avoid

Paying your bills on time is just one aspect of your credit rating. In fact, your score can take a blow if you do the following:

1. Use too much credit. Lenders typically won’t give you any more credit if you’re already maxing out your existing credit cards or lines of credit, even if you’re making the minimum monthly payments.

Use a professional credit counseling service to help you pay down your current debt and minimize the amount of credit you use.

2. Delete your credit history. A lengthy, traceable history of paying your bills can improve your credit score. Many people don’t realize that discontinuing old, seldom-used credit cards deletes this valuable credit history. Even if you find a credit card with a better rewards program, it’s best to keep your old cards around and use them every now and again.

3. Apply for several credit cards. Avoid credit card pushers at the mall promising immediate discounts and perks. Applying for too many credit cards is a red flag that you could be taking on a lot of debt. Therefore, you may be considered a high-risk borrower.

4. Have no credit variety. Having credit cards alone isn’t enough to maximize your credit score. If you also have a mortgage, line of credit or car loan, it further proves to lenders that you can organize and prioritize your finances.

5. Don’t have credit cards with established banks. Having a credit card with one of the six major Canadian banks can improve your credit score because they’re more discriminating in approving applicants.

You can turn to the experts at D. & A. MacLeod Company Ltd. for comprehensive personal debt management solutions.


Credit Counselling in Ottawa And Eastern Ontario

If you’re struggling with debt or have a bad credit rating, the licensed insolvency trustees at D. & A. MacLeod Company Ltd. can help. Book a free consultation with one of our licensed insolvency trustees to learn more.