Simple Ways To Increase Your Credit Score [Part 2]

Simple Ways To Increase Your Credit Score (Part 2)

In Part 1, we discussed how credit scores are calculated. Part 2 of this blog explains how to interpret the actual credit report and how you can improve your score.Borrowers of good credit, generally with a score of 690 or higher, can offer more options for interest rates when it comes time to shop for an uninsured mortgage. Mortgage Broker Rosanna Younan has offered a few tips below on how to improve your personal credit score:


Step 1: Review your report annually and correct any errors directly with the credit


You have the right to check your Credit Report – for free – as often as you want, and

checking your Report does NOT affect it! You will have to pay a small fee if you want to

get your Credit Score with your Credit Report.

Your Credit Report will contain the following information:

•Personal Identification, possibly including employment information

•A record of which organizations have recently asked for your Credit Report

•Your payment history for accounts that are reported to the Credit Bureaus

•Any information on the Public Record (collections, judgments, bankruptcies)

Step 2: Understand the ratings on your report.

Each account that is shown on your Credit Report will have a Rating, which reflects the

current payment status of the account. The Rating will be a number between 0 and 9.

The numbers simply describe the current payment status. Here are the possible




Account exists, but there is no recent activity to be rated


Account is “PAID AS AGREED AND UP TO DATE”. This is the “BEST” Rating.

2 to 5

Account payment is overdue (how long overdue will determine the exact rating), but

the account is not considered “Bad Debt” yet.


Payments are being made through a third-party program.


Repossession or Foreclosure of collateral.


Bad Debt. Account is in collections.

Step 3: Understand the credit score

Your Credit Score is calculated by converting information on your credit report to a

number based on a formula called the “FICO formula”. This number assists creditors in

determining your credit risk relative to others.

When you get your Credit Score, you will generally see a number between 300 and 850

– this is your score. The average score is in the mid-700s at present. You will also

receive an interpretation of your score, which can be more useful to you than the

number itself. It will explain why your score is at its current level.

The following points are the main drivers of Credit Scores:

•Payment History – the Ratings!

•Credit Already Used - Stay under 30 percent of your available credit for the

highest credit score

•Negative information found in the Public Record such as bankruptcies,

collections or judgments

According to FICO, for people with “normal” credit profiles, payment history and credit

already used make up 65% of your Credit Score.

Step 4: Rebuild your credit history

This is relevant for anyone who has had credit problems in the recent past. Here is what

you will need to know if they would like to start taking steps to improve their credit score:

•Any accounts in collection will show on the Credit Report for six years from the

date of last activity.

•If it becomes possible to start repayment on accounts in collections, you should

do so. Credit Canada Debt Solutions can help you rebuild your credit rating.

•You may want to apply for a secured credit card to assist you in rebuilding your

credit rating.

Step 5: Maintain a strong credit history

It is important to maintain your credit history. Here are some steps you should take:

•You should review your Credit Reports at least once a year.

•If you find incorrect information on your Credit Reports, contact Equifax or

TransUnion so that they can begin the Dispute Resolution process.

•Pay all your bills on time!

•Don’t apply for too much new credit in a short period of time.

•Don’t bounce cheques! (This is something else that your bank might report to

credit bureaus.)

(source: from Government of Canada sites)

Need mortgage advice? Contact Rosanna Younan.

Rosanna Younan

Mortgage Agent

License # M08004328

Verico Premiere Mortgage Centre Inc. #10317

Independently Owned & Operated

C: 416 729 9210

Related post:

What documents do I need before getting a pre-approval?

A mortgage pre-approval is not a loan guarantee. Find out what could affect your final approval before closing.

#mortgage #torontorealestate

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