Skip to content
build credit score

4 tips to help build your credit score

Looking to build up your credit score? People try to improve their credit profile for a variety of reasons. Often, this involves a desire for homeownership, but many people also simply crave stronger financial security and comfort. Whatever the case, there are some simple tips you can try as you work towards your final goal. Here are our top suggestions!

Pay off debts 

One of the best ways to bump up your credit score is to clear out some of your current debts. It’s probably not surprising to you that the more debts you have, the more that can impact your credit. Of course, we know debt levels don’t always accurately reflect a person’s creditworthiness. If you are planning to buy a home, this is important as you will need the approval of a mortgage lender.

When it comes to clearing out your debts, you should try to make sure you can make the minimum payments on all your debts before you start focusing more on a particular expense. This is because late or missed payments will only drag your credit score down more. By staying on top of all your debts, even if it’s only the minimum, you will avoid these consequences. Over time, as you make your payments, your credit score will start to rise.

Avoid new debts 

While you are paying off your current debts, it’s also important not to add onto your list of expenses. This is true for a couple of reasons. Primarily, there is the risk that you won’t be able to afford all of these costs. As a result, you will be late or miss payment due dates, which will sink you deeper into debt while also lowering your credit score. If you are having any trouble making your financial ends meet right now, you should not add onto your debts and make them worse. Even if you think you can handle more debt, there is also the fact that lenders might look at your current debt load as a concern if you are hoping to secure a mortgage. The more debt you have, the less available income you are able to put towards a mortgage. You need to think about the future when making these kinds of decisions. If homeownership is on your radar, you should start considering how you will support it!

Credit utilization ratios 

Credit utilization ratios play a key role in determining your credit score. This ratio compares your credit usage to your overall availability. For example, you might have a $6000 credit limit, and you spend $2000 of it each month. Your credit utilization ratio is 33 per cent. Keeping your ratio below 40 per cent is helpful for improving your credit score. This indicates you do not overuse your credit, but you also use enough to give an accurate reading. A person who uses 90 per cent of their available credit might look like they need to rely too heavily on credit to support their finances. On the other hand, if you never use your credit card, it is difficult for lenders to understand your finances. A happy medium is the best way to keep your credit score healthy and prove your creditworthiness to potential lenders. 

Track it with an app 

Finally, sometimes we need some extra support when we’re dealing with our credit. If you are having a hard time raising your credit score or managing your finances in general, you can try a budgeting app to keep yourself on track. There are several different apps out there that aim to promote financial health and well-being. You can check out some of our top suggestions here. When you use these apps, you can track your spending, your recurring expenses, your income, and much more. This will help you visualize and map out your finances, hopefully leading you to a stronger credit profile. After all, good credit depends on how well we can manage our money. 

Improving your credit score isn’t always easy, because it depends on your unique situation and the path that’s best for you. However, if you’re feeling stuck and don’t know where to begin, your best first step is to contact a mortgage broker. Whether you hope to buy a home or need guidance on your credit, we are here to ensure you get the support you need. 

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.