How to improve your credit score
By Alterna Team
December 20, 2021

At Alterna Savings we strive to help you make better informed financial decisions. That’s why understanding your credit score and how it affects you is important.

What is a credit score?

A credit score is a numeric representation of your credit risk and is intended to gauge the likelihood of you paying your bills on time.

It’s much like a financial report card. It tracks how much money you borrow, and how quickly you pay it back. If you have bills to pay or credit cards you use, essentially, you are borrowing money. Information about these financial transactions is sent to a credit-reporting agency, who uses this information to establish your credit rating

How is a credit score calculated?

Credit scores are a direct result of the information from your credit reports. This includes your payment history, the amount of debt linked to your name, and the length of your credit history. Depending on the type of credit product you are applying for, these factors can be weighed differently.


Credit Range:

Credit scores range between 300 to 900 - with 300 being poor and 900 being excellent.

Responsible financial habits will benefit you and your credit score

Here are 7 tips to help you improve your credit score:

For those who are applying for a loan or mortgage, you may find this information especially helpful. In Canada, credit-reporting agencies collect information about borrowers from other credit grantors.

Lenders will check credit reports gathered by Canada’s credit rating agencies to see how well you’ve managed your financial obligations. You can build a good credit history by following these 7 tips:

1) Use Credit Wisely: Just because you have it, doesn’t mean you need to use it. Try to use less than 35% of your available credit. Unless you really need it.

For example:

if you have a credit card with a limit of $10,000 and a line of credit with a limit of $10,000 your available credit is $20,000. Try not to borrow more than $7,000 at any time. This is 35% of $20,000.

2) Use Different Types of Credit: A diverse set of credit products could help improve your credit score.

Credit Card: While credit cards are all too readily available, they give you convenience, and a quick way to establish a credit history.

For example:

  • Loan
  • Line of Credit
  • Credit Card
  • Mortgage


3) Limit the Number of Credit Checks and Applications: Reduce the number of times you apply for credit as you want to limit the number of credit checks that appear on your credit report as they will impact your credit score negatively.

4) Pay Bills on Time: Attempt to pay out the balance of your credit products every billing cycle. Oftentimes, this isn’t possible and that’s okay! Be sure to make the minimum payment required for each cycle.

If you're the forgetful type, set up direct bill payments from your bank account. It's painless and will help improve your credit rating.

5) Don’t Deactivate Old Credit Products: Having a longer credit history will have a positive impact on your credit score. Note: If you transfer an older account to a new account, the new account will be considered new credit.

6) Dispute Any Inaccuracies on Your Credit Reports: Is something on your credit report not adding up? Check with a credit reporting bureau for any inaccuracies which can negatively impact your score. Verify that the accounts linked to your profile are correct and if there are errors, you should correct them right away.

Note: Here are some reputable credit bureaus that you can confirm your credit score with TransUnion, Equifax, and Experian.

7) Increase Your Credit Limit: By increasing your limit, you can lower your utilization ratio which will ultimately result in a higher score. That being said, remember not to abuse the available credit beyond your current means.

Whether you have good, bad, or no credit at all – most of us have room to improve our credit score. Building your credit is a journey and takes time and we’re here with you every step of the way.

Making wise use of credit, combined with regular savings and investing, can be a powerful way to meet your financial goals.


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