Improving Your Credit Score with Existing Debt | Your Money, Your Choices with Susan Daley


Do you know your credit score? When it comes to adulting, a good credit score
is the key to entering the grown-up kingdom. It can affect all sorts of things like landing
a job, getting an apartment, home insurance premiums, rates for mortgages, car loans,
lines of credit, and even getting a cell phone plan Since it’s such an important score, you
need to make sure it’s as high as can be. A good credit score is above 700, but if you
want the best rates, you’ll want it to read 750 and above. Don’t know what your  credit score is? I’ve found two free options for Canadians,
Mogo.ca or Borrowell.com. They shouldn’t hurt your credit score to check
them, but I haven’t done any research on the fine print, so buyer beware! You can also pay $24 to get your score from
the official credit bureaus: Equifax and TransUnion. There are links to all 4 in the description
of this video. I’ll wait while you go check. Time ticking You’re back! So…how did you do? Need some improvement on that number? Don’t worry…that’s what I’m going
to help you with today. I’m Susan Daley, and this is Your Money,
Your Choices. So, now that I’ve completely freaked you out that your credit score will cost you your
dream job and your dream home (sorry! But it’s totally a thing), what is it, and
how can you improve it? First, let me explain what your credit score
is and how it’s calculated. Your credit score is a number that’s used
by many organizations to determine if you are responsible at paying your bills and debts. Two agencies in Canada, TransUnion and Equifax, gather information about your payment history in your credit report, and assigns a score
that lenders and other organizations can use to decide if they want to loan you money or
give you a cell phone plan based on your past history. It sounds harsh to judge you based on a score,
but it’s the measure used industry-wide. So, then how can you improve it if it’s
not excellent? While there is no silver bullet, there are
some straightforward things you can do to improve your score. Here is a very important side note: if anyone
tells you they have a program that will re-establish your credit for a fee, run! Only your creditors: think credit card company,
bank, government for student loans, can alter your information if it is wrong, or add new
information as you take steps to improve your credit. Now, back to the steps you can take to improve
your score. In order of importance, they are: 1. Pay your bills on time 2. Don’t go over your credit limit 3. Pay your debt off quickly and 4. Reduce the number of credit applications you
make So, the first and most important step to take
in improving your score is to pay your debts (and bills) on time and in full. If you can’t pay your credit cards in full
each month, pay at least the minimum payment and then some. If you are in the situation where you can
only pay the minimum each month, you’re going to have to come up with a plan to pay
off the balance in full. Also, don’t forget other payments too, like
cell phone, cable, and utility bills, and gym memberships. While these items don’t normally show up
on your credit report, they will if you miss payments. If you struggle with remembering to pay on
time, set up email notifications when a bill is due and/or set up a
calendar reminder. Number two…don’t max out your credit limit
or go over. A lot of people don’t know this, but even
coming close to your credit limit without going over will reduce your credit score. This is called utilization and, according
to the Financial Consumer Agency of Canada, the amount of credit used should
not exceed 35%. For example, if you have a $15,000 Line of
Credit, and a $10,000 limit from all credit cards combined, the maximum debt outstanding
at any time should be less than $8,750. If your credit card limit is only $5,000,
the maximum outstanding at any time should only be $1,750. I learned this the hard way when I was in
university. I never went over my credit limit, but didn’t
realize that it was a bad idea to use as much credit up to my limit every month, even though
I was paying off the balance monthly! If you’re prone to overspending and maxing
out your credit cards and/or Line of Credit, you should pay off as much debt as possible,
and stick to using cash instead. Number three is pretty self-explanatory. Pay your debt off as quickly as possible. I’ll be covering how to do this in a future
video, but while your debt is high, you shouldn’t be taking on more anyway…just sayin. And finally, number four – reduce the number
of credit applications you make. If you’re looking to get a number of credit
cards or loans, don’t do it all at the same time. If you apply for too much credit at once,
your score will drop on the presumption that you’re applying for credit due to financial
difficulties, making it riskier for lenders. The big exception to this is if you are applying
for a mortgage or car loan and shopping around for rates, agencies usually count multiple
applications as one if they are all done within a couple of weeks. Improving your credit score is important to
adulting, so make sure you’re doing as much as you can to get your score as high as you
can. I hope these tips help! If you have any questions you’d like me
to cover, let me know! Leave a comment or send me a note. My name is Susan Daley and this has been Your
Money, Your Choices.

13 comments on “Improving Your Credit Score with Existing Debt | Your Money, Your Choices with Susan Daley”

  1. Bonnie Jean says:

    This was so helpful! And it's Canadian based so I know all these things apply to me 🙂 Thanks!

  2. gman gman says:

    omg thanks god I found you I learn something today. Gracias.

  3. Jessica Reynolds says:

    I had a similar issue with a landlord and Improving my credit scores was not so easy, i had a lot of collections from medical bills and past due credit cards. 
    I tried getting credit cards and i was always denied credit, even the secured credit cards. I mean even credit cards with my own money. 
    My credit score hit bottom 551, my friend sent me to this office in miami lakes, and i have been very impressed with them specially because the offered me money back guarantee in writing to fix my credit, most people are ashamed of this matter and rather not discuss the issue but let me tell you i wish i would have done it a long time ago.

  4. Rob R says:

    Hi Susan! I'm watching video by video from your channel from the beginning to the end until I get up to date. Almost every day I watch once.
    I'm from Brazil and I really really want to start a new life in Canada as soon as possible. There are lots of information to learn about the Canadian financial system before I travel and you're helping me a lot. I know that some things will be quite different for me for being a foreigner. Even so, all the tips and information you're teaching me are being listed and I'm constantly researching extra information for each subject.
    Keep helping us with your teachings!
    Thank you very much!

  5. Proton Helix Negatron. Oscar says:

    I was wondering if you were to get a personal loan to purchase a cheep house that looks like it should be condemed, if it would help establish credit quicker cause the plot of land could be worth more than the house, Plus you could salvage building mattereals and sell them to dealers and distributors.

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  13. Thomas Melton II says:

    CreditKarma is a fantastic free tool to manage one's credit score as well as rates one's approval odds for various credit cards. It also has a forecasting tool. So you can see what getting a new credit card or loan will do to your credit.

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