Rebuilding your credit isn’t about quick fixes or miracle solutions. If someone promises rapid improvement, it’s often a trap: high-interest loans offered by lenders who have little influence on your credit file. These strategies usually just add to your debt.

Improving your credit is a process that takes time, discipline, and good habits. While there’s no magic formula, here are five tips to improve the quality of your credit report:

1. Avoid late payments and keep your old accounts open
2. Keep an eye on your credit card limits
3. Check and correct your credit report
4. Reduce your debt by paying off the most expensive loans first
5. Avoid unnecessary credit applications

1. Avoid late payments and keep your “old” accounts

Paying on time is the foundation of a strong credit report. Even a small delay can leave a significant mark on your file, and a negative entry can stay there for up to six years. Whether it’s $50 or $500, a late payment is always viewed negatively by lenders. Consistency in your payments is the single most important factor affecting your credit score. Therefore, it’s crucial to stay organized so you never miss one. Consider setting up automatic payments or reminders.

In addition, long-standing accounts are generally better for your credit score than newly opened ones. A longer credit history gives lenders a clearer picture of your financial habits and shows stability. Also, be aware that some products, like high-interest loans or certain credit cards, can be viewed negatively due to their cost. It’s generally best to limit yourself to no more than two credit cards.

2. Keep an eye on your credit card limits

How you use your credit also affects your score. Ideally, you should use less than 35% of the available limit on each of your cards. Even if you pay your balance in full each month, consistently carrying a high balance close to your limit can hurt your credit report. The key is to keep your balances low, a low credit utilization rate demonstrates to lenders that you can borrow but choose not to. This is the second most important factor in calculating your calculating your score and improving your credit report.

3. Check and correct your credit report

Before applying for a loan, make it a habit to check your credit report. You can do this for free through Equifax or TransUnion. Make sure all the information listed is accurate. An error could cost you, it might lead to a loan refusal and lower your score. If you find any inaccuracies, request a correction immediately.

Lenders also value stability. Whenever possible, avoid moving every year, as frequent address changes can negatively affect how stable you appear. A credit report with low credit utilization, no late payments, and a stable personal situation greatly increases your chances of getting financing from financial institutions.

4. Reduce your debt by paying off the most expensive loans first

If you’re working to reduce your debt, start by paying down your credit cards. Their interest rates are often among the highest, and reducing those balances will improve both your credit utilization ratio (see point 2 above) and your score. Lowering your debt not only gives you more financial breathing room but also strengthens your credit profile.

Before applying for a new loan, take the time to calculate your debt-to-income ratio. If it exceeds 40%, your chances of getting approved decrease significantly, and it’s a sign that new debt could exceed your financial capacity. In that case, it’s better to reassess your needs and hold off on borrowing.

5. Avoid unnecessary credit applications

Every time you apply for credit, a note is added to your report. Having several inquiries in a short period can make it look like you’re urgently seeking financing, which may concern lenders. Worse yet, if your applications are declined, your score will drop directly.

If you’re shopping for a mortgage or car loan, try to group all your inquiries within a 2-week period, they’ll count as a single inquiry. And say no to store credit card offers in exchange for discounts if you don’t really need another card.

Conclusion

Just like a reputation, improving your credit report takes time but can be damaged quickly. When it comes to your credit, be careful and patient. Never push your finances to the limit. And remember, just because you can borrow doesn’t mean you should.

To learn more about your credit report, check out our resource “Understanding Your Credit Rating” or speak with one of our advisors. It’s free, confidential, and without obligation.

^{WARNING: For more information regarding your credit history, we encourage you to visit the websites of the 2 credit agencies in Canada, Equifax.ca and TransUnion.ca. The information provided in this article was obtained from these sites and should not be interpreted as legal advice.}