8 Common Canadian Credit Bureau Score Mistakes
The Canadian Credit Score Skinny
Credit scores are crucial to your financial health, and it’s essential to understand how they work to avoid common mistakes that can negatively affect your score.
Here are some of the most common credit score mistakes and how to avoid them:
1 – Late or missed payments
Late or missed payments are one of the most significant factors that can impact your credit score.
It’s essential to pay your bills on time, or you’ll be charged a late payment fee, which will lower your credit score.
Set up automatic payments or reminders to ensure you don’t miss any payments.
2 – High credit card balances
High credit card balances can negatively impact your credit score, as it indicates that you’re using a lot of your available credit.
Try to keep your credit card balances below 30% of your available credit limit.
3 – Closing old credit accounts
Closing old credit accounts can negatively impact your credit score as it can shorten your credit history and reduce the amount of available credit you have.
Instead, consider keeping your old credit accounts open, even if you’re not using them.
4 – Applying for too many credit cards or loans
Applying for too many credit cards or loans within a short period can negatively impact your credit score as it indicates that you’re desperate for credit.
Only apply for credit when you need it, and try to space out your applications.
5 – Not checking your credit report regularly
Not checking your credit report regularly can lead to errors and inaccuracies that can negatively impact your credit score.
Check your credit report at least once a year and dispute any errors you find.
6 – Co-signing a loan
Co-signing a loan for someone else can negatively impact your credit score as you’ll be responsible for the debt if the other person doesn’t pay it.
Consider the risks before co-signing a loan.
7 – Skip a Payment
Skipping a payment for a month and then getting caught up the next can be a significant credit score mistake.
When you skip a payment, your lender may report your account as past due, which can significantly impact your credit score.
Even if you make the payment the following month, the late payment can remain on your credit report for up to seven years, negatively impacting your credit score.
It’s crucial to communicate with your lender if you’re having trouble making payments. Many lenders offer payment assistance programs or temporary payment plans that can help you avoid late payments and protect your credit score.
8 – Applying For Credit at the Wrong Time
Applying for a loan without speaking with your mortgage broker can also be a significant credit score mistake.
Your mortgage broker can help you determine the type of loan that’s best for your financial situation and credit score.
Applying for multiple loans without consulting your mortgage broker can result in multiple inquiries on your credit report, which can negatively impact your credit score.
Conclusions and Further Thoughts
Before applying for a loan, it’s essential to speak with your mortgage broker and understand the different types of loans available to you. Your mortgage broker can help you find a loan that fits your needs and minimizes the impact on your credit score.
By avoiding these common credit score mistakes, you can ensure that your credit score remains healthy and improves over time.
CONTACT Michael Huber with credit questions, to discuss your new home purchase, a potential refinance or other mortgage questions 🙂 Click HERE.
Sincerely,
Michael
PS – One of my hobbies is blogging about mortgages, debt and government policy. During the day I’m a MORTGAGE BROKER in Kelowna, BC!
Check out the Huber Mortgage Home Buyers Guide HERE
