Getting your finances back on track often starts with improving your credit score. However, consumers often don’t understand what credit bureaus consider in determining your score. In fact, some people may not even know which information is contained in their credit report.  The following tips offer a glimpse into the world of credit bureaus and the information they consider in assessing a score. Most importantly, they highlight how taking a few simple steps can lead to big improvements in your score. Remember that Affirm Financial can also improve your score because they report to the credit bureau after each payment you make.


Pay your bills on time

This is widely considered the cardinal rule in improving your credit score. From setting up a series of alerts on your smart phone to taking advantage of various online budgeting apps (, for example), there are plenty of ways to stay organized and on top of your monthly payments.If paying online, be sure to send payments at least three banking days before it’s due. If you have the cash flow, setup automatic payments so you no longer have to worry about missing a due date.


Pay the minimum on credit cards

If you aren’t able to pay the full balance of a credit card bill, at the very least you should pay the minimum amount. Not only does this avoid additional late-fees and other unnecessary charges, it shows lenders that you are responsible which can therefore help improve your credit score.


Pay off your debts as quickly as possible

The best way to do this is by setting up regular automatic payments. Start with accounts with the highest interest rates and go from there. Also, be sure you’re paying towards the principal amount, not just the minimum payment. Lastly, set yourself up for success by accounting for debt payments in your budget (this should hyperlink to the family budget blog) at the beginning of the month – waiting until the end of the month to pay debt based on ‘what is left’ is the wrong approach.


Stay well below your credit limit

Just because you have a certain limit on your credit card doesn’t mean you have to use it. Remember, it’s not your money – you’re borrowing it. In fact, according to the Government of Canada’s Office of Consumer Affairs, the higher the balance the greater the impact on your credit score. A good tip is to stay within 30-40% of your total credit limit. Avoid asking for a credit limit increase as this could encourage you to borrow money that you can’t afford. You’re better off having two cards at 50-per-cent capacity than one that is nearly maxed. If you’re near your limit, pay more than the minimum to make room for interest and other fees.


Don’t submit too many credit applications

Applying for several new credit cards in a short period of time can hurt your score. With multiple credit cards, you would carry a larger repayment risk. The best advice is to space out your applications and to only apply for cards with the best rates.


Don’t close unused credit cards

It is better to periodically use a credit card you rarely use than it is to close that account. Closing the account shortens your credit history and may erase a very positive history with a specific lender. See ‘Establish a credit history’ below. If you do have closed accounts, be sure that this is indicated on your credit score. Get it in writing from a lender that your account is closed and in good standing with a $0 balance.


Establish a credit history

Though it may sound contradictory, you may have a low credit score because you’ve never been in a situation where you’ve borrowed money. The best way to build a credit history is by applying for a credit card (this should hyperlink to Affirm Financial application) and using it responsibly – that is staying within your credit limit and paying your bills on time.


Avoid hiring a company or service to repair your credit

There are many companies out there that claim they can repair your credit for a fee. This is simply untrue. There is nothing they can do that you cannot do yourself, i.e. reporting inaccurate information. The simple fact is that if you have accurate, yet negative information on your credit history, a third-party repair company cannot change this. They do not have the means to change or remove any information.


Review your bills monthly

Mistakes can happen. Be sure to review every charge on all of your bills. Perhaps your phone company accidentally charged you for a service you didn’t authorize; maybe there’s a charge on your credit card statement that you didn’t make.Take an hour at the end of every month and review your statements. Staying on top of this will not only avoid you having to pay for mistakes, but it will also get you in a routine of staying on top of your finances.


Know and review your credit score

Similar to reviewing your bills, be sure to review your credit score. Lenders and phone companies may have submitted inaccurate information to credit-reporting agencies – perhaps the agency made an error or you may be a victim of credit fraud and identify theft. Review your score once per year and report all errors to your credit bureau. The bottom line is understand your credit score and how it is used.


Understand the difference between statement date versus due date

Even if you make your payment on time and in full, your credit score may not reflect that. For example, if you have a balance of $1,000 on a credit card on January 15th, which also happens to be the statement date, but you make a payment just ahead of the February 8th due date, your credit card company will report that you have a $1,000 balance on your card. This is because credit card companies report to the credit bureau on the statement date not the due date. This is an innocent oversight that can affect your score.


Making even the smallest changes based on the tips above will help you improve your score and get you back on track towards achieving your financial goals.