Whether you’re a point hunter or just a credit card user, do you know the impact of credit card applications and usage on your credit file and score? In this guide, we remind you how credit scores are calculated in Canada. But, above all, we share our best tips to improve your credit score!

What’s more, some banks allow you to check your credit score from their secure platforms or mobile applications.

A credit score is a means by which banks, financial institutions and other lenders evaluate your ability to repay your debts, including your credit history. A low credit score indicates that you are less likely to repay your loan on time. Conversely, a good credit score indicates that you have the ability to repay your current and future debts.

Of course, managing your budget well and adopting healthy financial habits is a prerequisite for a good credit score and report. That said, if you need to improve your credit score (or maintain it), follow our top tips.

One of the best ways to improve your credit score is to keep up with your monthly payments. In fact, payment history – how often you pay your bills on time – accounts for 35% of your credit score. This includes your credit card payments, but also your other types of credit (mortgage, car loan, personal loan, etc.) and your telecom bills.

A single missed payment will impact your credit score and can remain on your credit report for up to 6 years. So make sure you make your payments on time and stick to your due dates.

Finally, in some cases, getting ahead of your payment schedule can help increase and improve your credit score. The Equifax and TransUnion credit bureaus will see that you use your cards regularly and are a good manager by paying your credit accounts without waiting for the statement to be issued.

Another of the most important tips for improving your credit score is to stay well within your credit limits. Your credit utilization ratio, which corresponds to the balance owed in relation to the available credit limit, should be below 30%.

The utilization ratio has a significant impact (30%) on your credit score. So keeping your credit utilization ratio below 30% is one of the best ways to improve your credit score.

Keeping credit lines open as long as possible helps you build up a long credit history, and thus improve your credit score. In fact, the age of credit, which is an average of the number of years your credit accounts have been open, has an average impact (around 15%) on your credit score. So keep your credit lines open as long as possible (for example, 15 years or more). One trick is to keep an “old” credit card, for example, with a no-annual-fee credit card.

Varying the types of credit you use can improve your credit score. In fact, the combination of credit instruments (credit cards, mortgage, car loan, personal loan, etc.) accounts for 10% of your credit score. We therefore advise you to hold at least two different credit instruments, but not more than 7.

More specifically, for credit cards, use them regularly, respect payment deadlines, stay away from available credit limits and keep them for a long time. These are all important factors in improving your credit score.

New credit applications account for 10% of your credit score. Each new application, such as a new credit card, will show up on your credit report and cause you to lose a few points. However, these points are generally recovered quickly (in about 2 to 3 months). To improve your credit score, space out your card applications.

That said, the temporary drop in your credit score isn’t the only issue. For example, if you have an upcoming real estate project and need to take out a mortgage, you may want to wait before taking out new credit cards.

Following the same reasoning as the previous tip, don’t apply for unnecessary cards. As mentioned earlier, new credit applications account for 10% of your credit score. So, if a card doesn’t give you a significant advantage, don’t apply for it. There’s no point in cluttering up your wallet and losing points (temporarily) with unnecessary cards and financing applications.

In some cases, increasing the credit limits on your cards (or some of them) could help you improve your credit score. Simply put, an increase in your credit limit will reduce your credit utilization ratio. If this reduces your credit utilization ratio to below 30%, then this change will have a significant impact on your credit score, as this is one of the most important factors.

In short, credit score is important in many aspects of your life. Whether you’re applying for a mortgage, a car loan or a new credit card. With a good credit score, you can generally obtain a better interest rate and higher credit limits. The higher your credit score, the better. By following the advice in this guide, you should be able to improve your credit score and maintain it.