Are you having trouble obtaining a mortgage and would like some guidelines on how to improve you score? Here are 5 easy steps that you can take to build credit and a few ideas on how to properly use your credit.
1. Obtain a Secured Credit Card – this is the easiest way to establish credit as there is no risk to the lender because the money you are spending you have already put the cash out front to cover you balance. Once you can prove to the lenders you can mange credit, they no longer require the security requirement and your cash deposit will be returned to you.
2. Gas or Department Store Card – these are extremely easy cards to obtain but you must pay the bills in the full amount on time as these cards tend to have an extremely high interest rate.
3. Borrow for an RRSP – borrowing money to use for an RRSP contribution which is to be paid back over the course of the year. This is easier to obtain as the lenders have access to the newly contributed cash so the rates tend to not be as high.
4. Obtain a Co-Signor – while it is not always the best idea to be a part of someone else’s debt, if it helps you obtain credit history and they are willing to co-sign for the card, do it. Make sure the card is in your name so that you are the one building credit.
Put up Collateral – if you can use something such as a GIC, you can use this to help you obtain credit as lenders value cashable assets.
1. Pay Bill on Time – having late payments on your bills will stick on your credit bureau for 7 years.
2. Low Balance – maintaining a balance on any of your credit lines of 60% or less of the total credit limit allowed will also work favorably to help increase your credit.