How do I… grow my credit?

Learn how to build credit and a strong financial future

Wondering how to build credit the right way?

Credit plays a big role in our lives, from getting approved for loans and mortgages to helping employers get to know us.

Whether you're building credit for the first time or looking to improve your existing credit score, it's important to understand that different activities affect your score in different ways.

Here are a few practical steps that can boost your credit score and help you handle your debts wisely. We'll also delve into the tools for building credit, such as credit cards and loans.

Pay all bills on time

Payment history makes up a large part of your credit score. Lenders like to see that you're reliable and know how to stay on top of your debts. Think of it like a report card—if you want good grades, you need to turn your homework in on time.

Phone bills, credit card bills, and student loans all count towards your credit score. They may also be due at different times of the month, which can make staying on top of payments a challenge. But overdue payments, big or small, can have a major impact on your credit score.

To stay in good standing, consider setting up automatic payments. If automatic payments aren't an option, try setting up reminders, calendar alerts or even enlisting a loved one to help you stay on track.

If you're having trouble paying your bills on time, contact your credit providers as soon as possible to discuss payment arrangements.

Settle high-interest debt

Large amounts of debt can have a significant impact on your credit score. High-interest debts, especially from credit cards, can be particularly harmful.

The easiest way to avoid interest charges is to pay off debts quickly. Tackle high-interest debts first as they cost the most in the long run. As well, try to pay more than the minimum payment on your credit cards. If you can manage it, paying off large chunks of debt at once will have a bigger impact on your credit score than gradual payments.

If you’re struggling with high-interest debt, consider consolidating different debts into one loan or transferring the balance to a lower-rate credit card.

To find out what options are available to you, speak to one of our trusted advisors.

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Use credit cards

Credit cards help show banks you are responsible with your money. Using them regularly, and paying them off regularly, can help improve your credit score.

Here are a few tips for using credit cards to build credit:

• Try to use less than 30% of your available credit to show that you can manage your credit responsibly. For example, if you have a $5,000 credit limit, you should only spend up to $1,500 before paying it all the way down.

• Keep the card account open: The longer you have a credit card and use it responsibly, the better it is for your credit history. Lenders like to see that you can use and pay down your credit card consistently over time.

• Avoid late payments: Late payments hurt your credit score. Always pay at least the minimum amount due each month. If you can, aim to pay more than your minimum, to keep your credit utilization (and interest payments) low.

• Regularly monitor your statements and credit reports: Keep an eye on your credit card statements and your credit reports to make sure they are accurate. Check for any issues or mistakes and contact your credit bureau if you find any errors.

Remember, it's important to use credit cards as a tool for responsible financial management rather than building debt. Use them carefully and be sure to pay off the balance each month.

Watch your credit report

Your credit report helps lenders determine whether you're a responsible borrower. It's important to check it regularly and make sure there are no mistakes or discrepancies in the data given out by the credit bureau.

Lenders set their own criteria for credit worthiness—what’s high to one lender could be low to another. Keeping an eye on your credit report will alert you if anything impacts your score. As well, you may see areas you need to improve on, like paying bills or paying down credit cards.

Find out your credit score today

Apply for a secured loan

Secured loans or secured credit cards are often the best option for those looking to improve their credit score.

With a secured loan, you put down collateral to get approved. This can be a lump sum of money or a physical asset like your car or home. These loans tend to have lower interest rates and more flexible terms than unsecured loans.

Collateral gives the creditor peace of mind, because they know you intend to repay your loan. If you do make all your payments on time, it'll reflect positively on your credit score. However, defaulting on the loan could mean losing the collateral you put down to pay off the outstanding loan balance. So be sure to read the fine print before signing.

Live within your means

Living within your means is a key part of managing your finances—and it's even more important when you’re trying to build or improve your credit score.

It might be tempting to buy that new car, take out a loan for that dream vacation or increase your credit limit as much as possible. But it's important to remember that whatever you borrow must be paid back.

Creating a budget is the best way to make sure your expenses stay within your means. Consider tracking your purchases and how much you spend each month. Once you see where your money is going, look for places to cut back.

It's also important to be mindful of credit card limits and use them responsibly. Only borrow what you can pay back without having to take out more debt.