Most of the Canadians out there are struggling or experiencing difficulty to get Credit Cards approved. You know why it happens? That is Bad Credit. So, today I’m going to show you some great ideas that help you to Improve Credit Score.

Probably, you might have already aware of the reasons for why your Credit Score is Bad.

But, by the end of this article, I hope that I can give you something new or something that was hidden from you.

And a majority of the people out there, don’t know why their credit is bad and how to overcome that.

For those, I have a handful of information here. So, let us move on.

What is Credit Score?

I know that you are here to learn more about how to improve Credit Score.

But, I just have a question before we move on to the steps.

The answer to this question is going to make a lot of sense to you while we go through the steps.

So, here is the question. What is meant by your Credit Score?

Wikipedia says; “Credit Score is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of the person. A Credit Score is primarily based on a credit report information typically sourced from Credit Bureaus.”

This could be the definition or meaning of Credit score. Simply, it says, Credit Score is something that reflects your credit worthiness.

The more Credit Score is always good and the less is bad. That is what it means.

But, is this information making any sense to you? Or Is this fair enough to understand, what Credit Score means?

If not, you need to know that first, before you try to improve Credit Score.

Credit Score in our point of view

Now, let us see, what mogo.ca says about your Credit Score.

Did I miss something before that? Is mogo.ca something that you are hearing for the first time?

If yes, this is a Canadian website which gives your Credit Score information. And that data is provided by Equifax.

They are actually doing a soft check on your profile. Unlike a hard check, this will not affect your Credit.

I will take you to that tool in detail in the next section because it is really important to know.

This is what your Credit score is;

  • 35% of your Credit Score depends on your Payment history.
  • 30% of your Credit Score depends on the Utilization ratio.
  • 15% of your Credit Score depends on the Length of Credit.
  • 10% of your Credit Score depends on the Types of Credit Cards you have.
  • 10% of your Credit Score depends on the Number of Inquiries you have made.

This is a Summary of what your Credit Score is.

Does that make any sense to you?

These are the building blocks of your Credit score.

If there is something wrong with these numbers, changes will appear on your Credit Score.

Let us break down each point in detail.

Payment History

What Mogo.ca says, even if you missed a payment to a parking ticket, that might lower your Credit Score.

Trust me, this is true.

Even if it is collections, some creditors report these missed payments to the Credit bureaus. Or even use a third party collection agency to get their money back.

Once it is handed over to the Credit Bureau, you will definitely see changes in your score. That is the way it works.

Payment history controls the 35%, the majority of your Credit Score.

So, always make sure that you pay bills on time, even if it is a parking ticket.

Utilization Ratio

Utilization ratio is the second highest factor, as that controls over 30% of your Credit Score. It is close to Payment history.

It shows your level of indebtedness. That means this is how much of your total available Credit you are using.

I have mentioned it in one of my previous article here. Anyway, if your balance is below 35% of your Credit Limit, you are good to go.

But, if you go over 70%, that will destroy your Credit Score. No matter even if you are an on-time payer.

See, if your debt is below 35% and you are making late payments, there is no use. And in vice versa too.

See, both Payment History and Credit Usage have equal importance in building your Credit Score.

Length of Credit

This shows that you are capable and responsible for handling your Credit Card. It means, some kind of trustworthiness.

Moreover, it controls over 15% of your Credit Score. That is not a small number.

The longer you have an account open, the better. 

Types of Credit Cards  

This is something to represents the variety of Credit Cards that you have.

If you have different Credit Cards, the Credit Issuer will understand that you are capable of handling the payments.

I’m not saying that you need to have tens of Credit Cards.

I mean, if you have multiple cards and are from different categories, that is Good.

And it controls over 10% of your Credit Score. 

Number of Inquiries

Last but not the least, the Number of Inquiries you’ve made. What does that mean?

Once you’ve applied to a Credit Card, you should wait for some time.

What I’m saying is, do not shoot your next Credit Card application within a span of at least 30 days. This is not the exact number. The more you wait is the best.

Now, you understood very well about Credit Scores, right?

Why is Credit Score so important?

This may sound like a cliché question. But I would say, it is really important to know the significance of Credit Score.

Because there are still people out there, who know nothing about it.

Mostly, the new immigrants to Canada are facing this problem.

Because, they are coming from a different country, where things might be different.

So, the awareness is indeed.

If you live in Canada, you will need a phone, car, home, etc.

For almost everything like this, you need to prove your trustworthiness as long as you finance them.

Just like any valuation process, more numbers, better quality.

If you have money to buy them, you don’t need to worry about your Credit.

But, if you don’t have money, of course, you do have to worry about your Credits.

This is why Credit Score is really important in Canada.

Improve Credit Score to where? 

Do you know, what would be a good Credit Score?

If you don’t, I will show you different Credit Scores and their quality levels here.

  • Poor: 300 – 559
  • Fair: 560 – 659
  • Good: 660 – 724
  • Very Good: 725 – 759
  • Excellent: 760 – 849
  • You are a Rockstar, if above 850.

So, when you are looking to improve your Credit Score, your target must be at least above 660, right?

It depends on what score level, currently, you are at. There is a reason behind, why I’m showing this to you.

The strategies that you need to improve your score are different. And it depends on your current score levels.

Strategies to Improve Credit Score


#1 Poor Credit Score (300-559) holders

If you are a Poor Credit Score holder, you got to do a lot of work to improve it.

Do you remember the things that affect your Credit Score which, I mentioned above?

Just go ahead and double check that again. And try to find, whether you missed any of them.

According to that assumption, 65% of your Credit Score depends on your Payment history and Credit Usage.

Your Credit Score is poor, that means you were caught on one of these points or both.

Pay your Bills on time

The only thing that you can do from your side is, pay bills on time and clear debts as early as possible.

Always keep your balances as low as 35% or less.

Find Credit Repair Companies 

In some cases, Credit repair will work. But that will cost you money. Also, you need to make sure that you are not dealing with a scam.

Because many of these Credit Repair Companies are a scam.

How these Credit repair companies works?

Credit Repair Companies will take your Credit Report from all three Credit Bureaus. After analyzing your Credit Report, they will find the errors in that.

Next step is negotiating with your lender. Some of them are willing to make changes but some of them not.

That is why Credit Repair is not 100% guaranteed.

So, you have to be careful when you choose your Credit Repair Company. Some companies will refund your money if they could not fix your Credit.

Choose them wisely and stay away from troubles.

Some of the best Credit Repair Companies

Negotiate with your Lender

Suppose, if you have missed any payments in the past, you can ask your Creditor to erase that debt history from your profile.

Most of the Creditors will agree to do that if you pay the balance amount that you owe.

In that case, your Creditor will then report the account as “paid as agreed” or maybe even remove it altogether.

Also, you can try to get some goodwill adjustments from your lender.

Let us say that you were an on-time payer and missed one or two payments, which now shows up on your Credit Report.

If there is any solid reason such as unemployment, you can request them to remove it from your Credit Report.

Considering your good history, your lender may do that for you.

Guaranteed MasterCard

If you don’t want to pay to any Credit Repair Companies, there is another solution that could improve your Credit Score.

Get a guaranteed MasterCard and use it as much as you can. I mean, keep using it but do not leave balances on the card.

If you don’t have a Credit Card yet, but your Credit Score and history is bad because of some other reasons, this could be a great idea.

You will definitely get a guaranteed MasterCard even though your credit is bad.

In some cases, you will have to pay some security amount to get a MasterCard.

#2 For those who have Fair: (560–659)

A fair Credit Score doesn’t mean that you are safe. A fair score is always at average or maybe less.

You can try the same points, mentioned under the Poor category.

#3 Good Credit Score Holders: (660–724)

I would say, a good Credit Score (660-724) is not that good.

If you apply for some premium Credit Cards, it is not easy to get approval with this score.

How to improve Credit Score from Good to Very Good?

1 Pay bills on time

Always pay your bills on time.

2 Stay below 35% of your overall Credit limit

If you can stay below 35% of your overall credit limit, that will definitely help to Improve Credit Score.

3 Raise your Credit Limit

The main intention is to lower the credit usage to below 35%. When you raise your credit limit, automatically, the percentage of usage will decrease.

But, make sure, you don’t overspend it, because your limit increased.

4 Keep your Current Credit Cards, instead closing them

Do not close any of your Credit Card accounts, which doesn’t look good to a Credit Bureau.

What you can do here is, assign your card to pay any of your utility bills, instead of just canceling it.

#4 Very Good & Excellent Credit Score Holders (725 – 849)

Keep paying your bills on time.

Do all purchase with your credit card and make sure to keep your balances as low as 35% or less.

Do not cancel any Credit Card accounts, keep using them.

#5 Are you above 850?

You are a rock star if you have a Credit Score of above 850.

You don’t need to do anything to improve it. But make sure you don’t spoil it.

Share what you have done to go above 850, so that others can also follow that.

Summary of steps to Improve Credit Score

  1. Those who don’t have a Credit Card, get one first and use it.
  2. Get a guaranteed MasterCard, if you don’t have enough score to get a Credit Card.
  3. Pay your bills before the due dates.
  4. Pay your bills in full or, at least the required minimum payment every month.
  5. Reduce the number of Credit Applications.
  6. Do not go over the limit. Keep your balances as low as 35%.
  7. Increase your Credit Limit and under-use your Card
  8. Use different types of Credit Cards for different purposes.
  9. Clear the debts as early as you can or pay twice or more on each month.
  10. Do not close your current Credit Card accounts.
  11. Make sure your reported Credit Limit is the same as your current credit limit.
  12. Try to get any Goodwill adjustments from your lender to fix your Credit Report (If you have a good history with them).
  13. Clear the debts and negotiate with your lender to remove any late payment history from your Credit Report (They can report it to Bureaus as “paid as agreed”).
  14. Try with any reliable Credit Repair Companies. 

In Conclusion

Remember one thing, if you give up on trying to improve credit score and give it to a Credit Repair Company, there are no loopholes or laws that Credit Repair Companies can use to correct any information on your report.

Everything is possible by yourself until you try.

There is no Credit repair company can do anything that you can’t do for yourself.

Thanks for stopping by this article.

2 Comments

  1. Hi,
    Thanks for the valuable information you have posted online. I would like to invite your kind attention that you have mentioned (#10) above that “Don’t close the credit cards account” but I would like to ask your kind consideration that how’s about if one have secured credit card and after building credit history with that have able tor received/approved non-secured credit card so should he need to cancel the secured credit card down on the road

    Thanks for your response.

  2. Hi Shaaz, thanks for the question.

    We would suggest to keep the guaranteed credit card until you hit a minimum score of 700. If you have a score of 700 and above and have other credit cards which is much useful than the secured/guaranteed one, you can go ahead and cancel it with no doubt. There may be a slight decrease in your score, which is not that much a problem. Because, it will increase if you follow the good credit habits like paying bills on time and maintain a good credit utilization ratio.

    Thanks 🙂

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