Above all, do not pay your accounts late. It doesn't matter whether the amount owed is high or not, a delay remains a delay... A rating of R-3 or fewer risks being badly perceived by your creditors, whether for a $200 or $2,000 account, and know that any bad mark remains in your file for 6 years. Discipline, therefore, pays off since it is the factor that weighs the most in the balance for the calculation of your score.
Keep your credit card and line of credit balances low relative to your authorized limit (ideally 35% or less of it). In fact, the closer your balance gets to your authorized limit, month after month, the more your score will be negatively affected, even if you pay the full balance each month. A low ratio indicates that you would have the option of going into debt but are choosing not to.
Accounts (credit cards/line of credit/personal loan) that have been open for a long time “pay” more for your score than newly created ones. Keep them open, if possible, without multiplying them too much. Indeed, a longer history gives a better picture of your consumption habits and is a good indicator of stability.
If you need to reduce your debt, always start by reducing the amount owed on your credit cards. 2 reasons: Credit cards generally cost you more in interest than other types of credit. In addition, debt that is more expensive in terms of interest costs is generally less well regarded than the debt that is more "affordable" in terms of interest costs.
Yes, having several types of credit (eg: line, loan, mortgage, etc.) promotes a better score. On the other hand, the fact of having several increases in your debt complicates the management of monthly payments and, in the event of delays, risks canceling the benefits to your score. So don't go into debt just to get a better score.
Avoid multiplying credit applications over time with creditors, because a high number of credit applications is harmful to your score and especially if you have refusals. Remember that a credit card form to "win a trip down south" or "get a day's discount" at a store is an application for credit, even if you don't keep the card after. Moreover, if you are shopping for a house or a car, these steps taken in a short period of time are usually considered by credit agencies as a single application. Ask the creditor(s) with whom you are shopping for a better rate.
As a reputation, a good credit record takes time to build and can easily be tarnished. When it comes to your credit report, be careful and patient. Never go to the maximum of your financial capacity and remember that just because you have the capacity to go into debt doesn't mean you should. To find out more, click on jeanfortin.com/creditscore and to measure your level of indebtedness, click on testezvosfinances.com.
