Understanding and Improving Your Credit

A lot of times I get this question - What is my credit score and how I can improve it?


Are you ready for this? How does it make an impact on your debt handling and borrowing?


30% Credit Utilization (Borrower’s debt burden)

35% Payment History (Any derogatory payments)

15% Length of Credit History (Number of years accounts have been active)

10% Inquiries (How often borrower looks for credit)

10% Type of Credit(Does borrower manage different types of credit?)


Tip: If your credit score is 640 and above, no matter if it shows "fair" you are in good books of lenders


Keep this handy

1. Pay Your Bills on Time

2. Get Credit for Making Utility and Cell Phone Payments on Time

3. Pay off Debt and Keep Balances Low on Credit Cards and Other Revolving Credit

4. Apply for and Open New Credit Accounts Only as Needed

5. Don't Close Unused Credit Cards

6. Don't Apply for Too Much New Credit, Resulting in Multiple Inquiries

7. Dispute Any Inaccuracies on Your Credit Reports


Tips to Improve Credit

1. Establish a minimum of 2-3 trades with good repayment history for 24 months.

– The longer a credit facility is open and active with timely repayment,

the better the score can be.

2. Ensure trades are varied: credit cards, installment loans, lines-of-credit and

department store cards.

– Lack of credit does not equal good credit.

3. Illustrate the use of credit on a regular basis and ensure repayment is on time.

– Arrange for automatic payments if possible.

4. Review statements for accuracy.

5. Check credit reports on a regular basis, making the necessary corrections

and updates.

6. In general, apply for credit only when required.

7. When rate shopping, obtain quotes over a two-week period to ensure they are

treated as one inquiry.


Mistakes to Avoid

1. Taking on new credit facilities simply because they are offered.

2. Spending simply to earn rewards or points.

3. Skipping or withholding payments, even if they are in dispute.

4. Making only minimum payments and therefore paying more interest on balances.

5. Taking cash advances for non-emergency situations.

6. Accepting or using credit before fully understanding the terms and conditions.

7. Hesitating to seek the help of professionals. Don’t go through it alone!






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Sameer Nagpal

6908 205 St Langley, BC. V2Y 1R2

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