How to manage your credit score

Your credit score impacts many important financial decisions in your life such as applying for a loan, getting a mortgage, or even getting a job. That's why it's crucial that you understand your credit file and how to get a good credit score.

Your credit file is opened the moment you borrow money for the first time. From that date on, financial institutions, finance companies and retailers send specific information about the transactions you've made with them to credit-reporting agencies, such as TransUnion, each time you take out a loan or get a credit card.

These agencies then determine a credit score that gives lenders an idea of how well you've managed your financial obligations. Lenders can then determine your creditworthiness, or ability to repay your debts.

How to get a good credit score:

  • Pay your bills consistently on time
  • Pay the full balance due on your credit card each month
  • Borrow only what you need and are able to repay
  • Repay your loans on time and as quickly as possible

If you do all of this, you'll get a good credit score and save in interest costs too.

What not to do:

  • Get significantly behind in your payments (even unpaid library fines and parking tickets may be considered a sign of bad money management)
  • Write cheques if your account balance can't cover them – a single cheque returned for non-sufficient funds damages your credit file
  • Ask for an increase in your credit limit several times in the same year
  • Apply for a lot of credit
  • Submit an empty envelope to an ATM