The Ultimate Guide to Increasing Your Credit Score in Canada

1. Pay off Debt

Paying off debt is the number one thing you can do to start increasing your credit score right away. As we mentioned above, demonstrating that you can be relied on to pay back money you’ve borrowed is a key criteria that credit bureaus consider when assessing your score. Don’t worry if you can’t pay off all your debt at once. Take a look at where you may have the largest balance or are paying the most amount of interest and concentrate your efforts there first.

2. Increase Your Credit History

If your credit score is lower than you’d like it to be, it could be because your credit history is short or non-existent. Why? Because the longer you have a credit account open, the better your credit rating becomes. Even if you don’t really use credit, it’s a good idea to at least open a credit card account, regularly make purchases with it, then pay it off. 

You’ll likely only be approved for a small amount, but that’s OK! You don’t even need a large credit limit to do this. It will simply help you build your credit profile. 

Remember: when it comes to credit history, the longer, the better. That means even if you aren’t actively using your credit account, it’s a good idea to keep it open as soon as you close it up, you stop adding to your credit history. 

3. Don’t Use All Your Credit

Now whether you’ve just decided to open a credit card for the first time or you’ve got multiple sources of credit in the form of a car loan, line of credit, and a credit card—everyone who wants to increase their credit score needs to remember this rule— don’t max out your credit!

4. Mix up Your Credit

Another thing that can help your credit score is to use multiple types of credit. So having not only a credit card, but also a personal line of credit or some other type of loan can indicate to lenders that you know how to responsibly manage various types of debt. 

That being said, if you’re already struggling with a low credit score, frequently applying for new debt can actually hurt your rating—so while having a few types of credit can help you increase your score, consistently applying for some kind of credit on a regular basis can actually do the opposite.

5. Don’t Acquire New Debt

Now there’s a difference between applying for and acquiring new sources of credit and accumulating additional debt. If you’ve got a low credit rating and have high levels of debt on one or multiple credit account—don’t add to your problems by piling on more debt. This will actually harm your credit score, not to mention only make it more difficult for you to repay the funds you previously borrowed.