Understanding your credit report and credit score

Table of contents

How to improve your credit score

The actual formulas used to calculate credit scores are the property of private companies and are not available to the public. This means it is not possible to know exactly how many points your score will go up or down based on the actions you take.

However, the main factors that are used to calculate your score include:

This is the most important factor for your credit score. It shows:

  • when you paid your bills
  • late or missed payments
  • debts you did not pay that were written off or sent to a collection agency
  • whether you have declared bankruptcy.

Your score will be damaged if you:

  • make late payments—the longer it takes you to make your payment, the worse the impact on your credit report and score will likely be
  • have accounts that are sent to a collection agency
  • declare bankruptcy
  • withhold payments due to a dispute and the lender reports your payments as late.

With certain financial products, any payments you make on time will not be counted and will not improve your credit score. However, if you miss payments and your account is sent to a collection agency, this can be included and will damage your credit score. These products include:

  • chequing and savings accounts
  • student loans
  • prepaid cards (these are not the same as secured credit cards).

Telecommunications accounts, such as mobile phone and Internet, are exceptions. Payments you make on time as well as late payments may be considered for your credit score.

Tips to improve your credit score 

Always make your payments on time. If you cannot pay the full amount, make at least the minimum payment. 

If you think you will have trouble paying a bill, contact the lender right away. See if you can work out a special arrangement to repay your debt.
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