icon

Credit Cards & Your Credit Score

These 4 tips can help you improve your credit score. Use our tips to prevent negatively impacting your score.

Credit cards & your credit score

Having and using a credit card effectively can help build and improve your credit score - that's a fact! However to do so one must be financially disciplined. Simply utilizing a credit card with disregard for paying it off can in fact significantly hurt your credit and as a result you may end up paying higher interest rates. The strategies below will help guide you along the right path:

1. Utilize your credit card.

The best way to build credit is to use your credit card and pay it off fully on a regular basis. This reflects your ability to borrow and pay off debt. Not having a credit card or having one but not using it are not effective strategies if you want to build your credit and have a high credit score.

2. Make payments on time.

While making payments on a regular basis can help improve your credit score, making late payments can hurt your score. Make sure to always pay at least the minimum amount by the due date. If you have several credit cards you can set up automatic withdrawals from your account to alleviate the stress of managing payments on multiple cards.

3. Watch your credit utilization ratios.

The credit utilization ratio is your balance divided by the credit card limit. Having a high balance can adversely impact your credit score. It is important to note that cancelling existing cards or reducing your credit limit can actually negatively impact your credit score by reducing the ratio. The best way to keep the ratio low is to not rack up high credit card debt.

4. Reduce the number of new credit card applications and how many credit card limit increase applications you submit.

Every time you apply for a new card or for a credit card limit increase the lender will check your credit report as part of the application, which counts as a 'hard hit'. Having too many hard hits on your credit in a relatively short period of time may have a negative impact on your credit score.

Find the best credit card today

Instantly compare the best credit cards in Canada.

Latest mortgage articles

Inflation is impacting your mortgage rate. Here's what you can do about it
Inflation is at its highest level in nearly 40 years. Those with variable-rate mortgages should consider comparing mortgage rates to offset rising interest rates.
Learn More
4 mins read
Should you buy a house right now, or wait until interest rates come back down?
House prices may be falling, but interest rates are rising. Where does this leave Canadians looking to buy property?
Learn More
5 mins read
Bank of Canada lifts lending rate to 3.25%. We ask a mortgage broker what this means for homeowners and buyers
On the heels of a 75-basis-point rate hike, Toronto mortgage broker Sung Lee weighs in on how best to approach your mortgage decisions.
Learn More
7 mins read

Subscribe to our newsletter

Stay on top of our latest offers, relevant news and tips!

Thanks for joining!

You'll be hearing from us shortly - stay tuned.