Do you need to raise your credit score 100 points or more? Sometimes life throws you a curveball (or two) that hurts your credit score and makes it harder to access more than just the financial solutions you need. In Canada, your credit score plays a key role in all of your major financial decisions. Whether you want to buy your first home, rent an apartment, or apply for that dream job, your credit score says a lot about how you handle money.
If you currently have a low or bad credit score and you are looking for ways to raise your credit score by 100 points, then this article is for you. While there is no magic bullet that will quickly raise your credit score, especially a bad credit score, these 10 tips can increase your credit score a 100 points or more over time.
But in order to do that effectively, it’s important to understand how credit scores work, why they exist, and a good credit score is so important.
What is a credit score?
A credit score is a three-digit number on a scale of 300-900 that represents the likelihood that you will repay a loan as agreed. Lenders use your credit score to decide whether or not to give you credit and determine the interest rate you will be charged. They give a quick, quantifiable measure of your financial behaviour and reliability based on your past actions.
A good credit score in Canada tells lenders that you are able to manage your financial obligations responsibly, and therefore, are very likely to repay your debt as agreed. In other words, a good credit score means you probably won’t default on your loan which makes lenders much more willing to lend to you and offer better rates.
Why do credit scores exist?
Credit scores exist to give lenders a quick and easy way to assess how creditworthy you are, which means how likely you are to repay any credit you are given. This includes loans, credit cards, and any other forms of borrowing.
A generation ago, your local bank or credit union was the only option whenever you wanted to borrow money. The manager or loan officer would base their decision solely on how well they knew you as a person. If you had a great relationship with the manager, even if your finances were in shambles, your odds of getting your loan approved were better than 50/50.
Fast forward to modern-day life where we no longer live in small communities where everybody knows your name. So now the only effective tool that creditors have to determine whether to offer someone a loan is by looking at their credit score.
Why is a good credit score important?
Beyond giving you access to loans and credit products with better rates and terms, a good credit score also opens up opportunities to save you money, make money, and provide you with financial security.
That’s because credit scores are also used in other scenarios, like when a landlord is deciding whether to rent to someone, or an employer is considering a job applicant. In these situations, a credit score helps them judge how reliable and trustworthy you are. A credit score can even impact whether or not you can get a cell phone plan or the cost of your car insurance premiums.
Do you need to raise your credit score 100 points? Understanding credit score ranges
There are different scoring models in Canada that use your personal data to calculate your credit score. In Canada, your credit score is determined based on the information on your credit report by either Equifax or TransUnion.
Equifax and TransUnion are credit reporting agencies that gather information about you reported by your creditors such as your payment history, balances owing, and even how many times you have applied for credit. These reporting agencies then use that information to calculate your credit score.
Credit scores range from 300 to 900 when using the Equifax Risk Score (ERS) 2.0 model. The higher your credit score, the less risky you are to Canadian lenders. However, each credit bureau has different scores, and every lender will look at your credit score along with their own lending criteria beyond your credit score to make a decision.
Wondering what the risk rankings of credit scores in Canada look like? Remember, there are different models. Let’s look at the interpretation of the credit scores using the Equifax Risk Score (ERS) 2.0 model.
- 760 – 900: Excellent credit score. Your chances of getting approved for any credit products are high, and you may get the lowest interest rate.Â
- 725 – 759: Very good score. You are most likely to get approved for credit, and you can expect favourable interest rates.
- 660 – 724: Fair credit score. You may get approved for financing, and you can expect above average interest rates.Â
- 560 – 659: Poor credit score. You might only get approved for secured products at a very high interest rate, sometimes in the double digits.Â
- 300 – 559: Very poor credit score, you are a high-risk borrower. If you find yourself in this category you might not get approved for loans. If you do get approved, your interest rate could be as high as 60% depending on the province you’re in.
Generally, using the ERS 2.0 model, a credit score of 660 and up is considered a low-risk borrower by Canadian lenders.
How long will it take to raise your credit score by 100 points?
Raising your credit score is a gradual process and the time it takes can vary significantly based on individual circumstances, such as your current credit score, your credit history, and your financial habits.
For example, if your credit score is because of major negative items like a bankruptcy, consumer proposal, or loans and bills sent to collection agencies, it can take a few years to raise your credit score 100 points or more. That’s because these items remain on your credit report for several years and continue to impact your score during that time.
On the other hand, if your score is low because you have high balances owing on your credit cards and lines of credit, or you missed payments, you could raise your credit score by 100 points a lot faster. Making regular, on-time payments, paying down your debt, and keeping your credit card balances low is something you can start doing right away that can have an immediate impact on your credit. If you’re consistent with these good habits, it’s possible to raise your credit score 100 points within a few months to a year.
10 tips to raise your credit score 100 points
If you find yourself on the low credit score end of the spectrum, the first thing you should realize is that raising your credit score by 100 points is not as overwhelming as it sounds. Although there’s no quick fix, you can raise your credit score 100 points in Canada using these ten tips below:
1. Pay your bills early
Do you often miss your credit payments? How do you feel when you remember you missed a scheduled payment, and it affects your credit score? Terrible, right?
Luckily, there are measures you can put in place to ensure you always pay your bills on time. You can set up an autopay from your bank or credit card company or install a mobile app that helps keep track of your bills.
If you have any outstanding bills right now, you should pay them off first before the new bills. You can also set a reminder using your digital calendar to ensure early payment of bills.
To raise your credit score by 100 points, paying your bills on time is critical because it prevents your credit score from decreasing, especially if you struggle with making payments before the due date.
2. Keep unused credit cards open
To raise your credit score by 100 points, do not be quick to close old or unused credit accounts. Keep your credit cards open even if you don’t use them, and leave the records of fully-paid old debts on your credit report. A longer credit history raises your credit score over time because credit scoring models value long-standing credit relationships.
That’s because the length of your credit history accounts for a portion of your credit score. Closing an older account shortens the average length of your credit history, which can lower your score, especially if the account was in good standing. Credit scoring models value long-standing credit relationships.
However, try to have some transaction activity on your old credit card, even if you rarely use the card. Providers may close your card due to inactivity. To avoid this, you can gradually lengthen your credit history by setting up auto payments for lower expenses such as your monthly subscriptions, like Netflix or Amazon Prime, for example.
3. Do not max out your credit cards & lines of credit
Keeping the balances low on credit cards and lines of credit is an easy way to raise your credit 100 points over time. That’s because it improves something called your credit utilization ratio, which makes up a significant portion of your credit score.
The credit utilization ratio is the percentage of your available credit that you’re currently using. It’s calculated by dividing your total credit card balances by your total credit card limits. The lower your credit utilization ratio, the better it is for your credit score. A lower utilization ratio shows lenders that you’re not heavily reliant on credit and that you can manage your debt effectively.
If you have a certain amount as your credit limit, try as much as possible to spend less, and reduce your credit utilization ratio. Most creditors will look closely at the available credit on your cards and how much you currently owe. It’s best to spend less than 30% of your available credit.Â
For example, if you have $2000 as your credit card limit, try to keep the balance below $600 and pay more than the minimum payment amount. Ideally, you want to pay off your credit card balance in full every month. That way you get the benefit of positive payment history while never going over the credit utilization threshold, and the bonus of never paying interest charges.
4. Review your credit report regularly
Errors in your credit report can pull down your credit score. Regularly checking your credit score and reviewing your credit report can potentially raise your credit score 100 points over time because it allows you to spot and fix issues like incorrect late payment records, duplicate accounts, or identity theft issues, which you can dispute with the credit bureaus.
It also helps to review other factors in your credit report that reduce your credit score and find ways to improve them. Companies like Borrowell and ClearScore allow you to check your credit score for free as many times as you want.
5. Dispute any inaccuracies on your credit reports
So you reviewed your credit report and found a mistake. Now what? The law requires credit reporting agencies to correct any legitimate mistakes that are found inside your report. But it is your responsibility to inform the agency.
Equifax’s credit dispute process is fairly straightforward to follow. You will need to provide comprehensive details about the error. It is unlikely that both credit reporting agencies would have identical errors. For TransUnion, there is a section of its website dedicated to disputing errors in your credit report.
Documenting all of your interactions with the respective credit reporting agencies is necessary. The majority of the time, everything goes smoothly, but it helps to have a communication paper trail in case there are any misunderstandings. You should begin this dispute process as soon as possible; it could take 30 days or longer before the corrections are implemented and another month after that for your credit score to adjust.
6. Pay your debts in full
Write out how much you’re owing and draft a payment plan for each credit account. There are various strategies to help pay off your debts, such as the snowball and avalanche methods. Use the Hardbacon Debt Repayment Calculator to run different scenarios and find the best strategy for your situation.
You can start by paying off small debts, excluding mortgages, by using the debt snowball method. The debt avalanche payment method also helps pay off debt with the highest interest rate first. Avoid bad debts like accounts sent to collection agencies because it lowers your credit score and stays on your report for up to 7 years.
7. Don’t apply for new credit unless you actually need it
Resist applying for new credit unless you absolutely need it. If you’re constantly applying for new credit, lenders see this as a sign that you’re experiencing financial difficulty, which could make you seem like a riskier borrower and potentially lower your score. By not applying for credit you don’t need, you can raise your credit score by 100 points or so for the following reasons:
A) It reduces hard credit checks
Each time you apply for credit, a hard credit check, called an inquiry, is recorded on your credit report. These inquiries can temporarily reduce your credit score by a few points. A lot of hard credit checks in a short period of time can significantly reduce your score. By not applying for unnecessary credit, you avoid big and small dings to your score.
B) It preserves the length of your credit history
Opening new accounts can lower the average age of your credit accounts. If you do not apply for new credit, you maintain the length of your credit history, which can help raise your score.
Constant applications for credit raises a red flag for lenders because they see it as risky behaviour. Before you apply for a new card, ensure it’s necessary and, if possible, avoid debt.
8. Use a mix of credit accounts
Having different kinds of credit accounts shows lenders that you can handle different kinds of financial obligations. Different types of credit include things like credit cards, retail accounts, installment loans, mortgages, etc. For example, you should aim for a mix of credit accounts on your credit report like a car loan, mortgage, and a line of credit.
Generally, lenders like to see different types of credit on your report before issuing you new credit. However, do not apply for a loan just for the sake of mixing up your credit because hard credit checks can impact your score.
9. Increase your credit limit
The credit limit is the maximum amount you can spend with your credit card or line of credit. You can ask your credit card company or lender to increase your credit limit. But this only works if you can control your spending and not charge up a balance.
Increasing your credit limit can help increase your credit score by affecting a significant factor in credit scoring calculations: your credit utilization ratio. This ratio is the percentage of your total available credit that you are currently using. If you increase your credit limit but don’t increase your balance, you’ll lower your credit utilization ratio, which positively impacts your credit score.
Although raising your credit card limit increases your score, you must however be careful not to spend more than your available limit. For instance, if you ask for a raise in your credit card limit from $3000 to $5000, try to keep your balance below $1500.
To increase your credit score, the balance of each personal credit card or line of credit account should be 30% or less. Spending less than 30%of your credit limit can raise your credit score by up to 100 points over time. However, it will require a hard credit check which will temporarily impact your credit score. Keep that in mind, especially if you have applied for new credit recently.
10. Consider getting a secured credit card
If you are just starting to build your credit score, one of the fastest ways to raise your credit score is to get a secured credit card. A secured credit card requires you to make an upfront payment which serves as your credit limit.
For example, if you make an upfront payment of $250 to your credit card company to get a secured card, your credit limit will also be $250, and you are allowed to spend the upfront payment.
One of the best secured credit cards in Canada is the Neo Secured Card by Neo Financial. Approval is guaranteed and it has the lowest security deposit requirement we’ve come across at just $50. Neo also offers one of the best cash back programs too. You can earn an average of 5% cash back, and up to 15% for each first purchase at a Neo partner retailer
When use this secured card responsibly, every payment you make gradually increases your credit score – making it one of the best credit cards to rebuild your credit in Canada. If you are finding it difficult to get approved for an unsecured card, you can start up with a secured card, build your payment history and apply for an unsecured card after a while.
We touched on some of the ways you can raise your credit score, but you don’t have to do it all on your own. There are a few companies that have some remarkable credit-rebuilding tools. We are going to review each of them in no particular order. They are all worth serious consideration if you’re looking to raise your credit score 100 points or more.
KOHO’s credit-building subscription
KOHO offers a prepaid Mastercard and an app that can help you keep tabs on your finances. Budgeting is very important when trying to raise your credit score. If you do not have a good budget in place, you could end up spending more than you can afford. You can load your KOHO Prepaid Mastercard with a specific spending limit to keep you on track, and you can use the app the tracking spending and create a personalized budget in various expense categories.
If you trying to raise your credit score by 100 points, the KOHO credit-building subscription can help. Every month you will pay KOHO up to $10 for 6 months. KOHO opens a line of credit tradeline on your credit file. KOHO then reports your monthly payments to both TransUnion and Equifax. This credit-building tool helps raise your credit score for two reasons.
- It adds a new tradeline to your mix of credit products. Having a mix of revolving and fixed credit products is highly recommended
- It provides a positive repayment history, which dramatically impacts your credit score.
Refresh Financial’s secured credit card
Refresh Financial’s credit building loan
Refresh Financial is a popular credit repair company with some powerful tools that can help you on your path to rebuilding your credit score. It is a secured loan, but it works a little differently than other loans you’re used to.
This unique credit rebuilding loan doesn’t give you any money upfront. Instead, your payments are saved and held in trust until the end of the term. It’s a secured loan that works more like a savings account that also helps you raise your credit score.
The term for this loan ranges from 12 to 36 months, depending on the term you want. These loans range from $1,250 all the way up to $10,000. Every month you would make payments for a predetermined amount, and at the end of the term, you get the total of your payments back less interest and fees.
Benefits of using credit repair companies
Most of us are not familiar with the inner workings of Equifax and TransUnion and the laws that govern them. However, a little-known secret to raising your credit score is to seek out the help of professional credit repair consultants. Yes, not an app, but a person.
These individuals are fully versed in the laws that these credit reporting agencies must abide by. With your permission, the credit repair consultants contact the credit reporting agency and have the incorrect information removed as soon as possible.
These experts go through your report with a fine-tooth comb and come up with a plan to improve your credit score. Remember, these credit repair professionals have worked on thousands of accounts and have documented success.
Think about this situation: you are shopping for a mortgage but also have errors on your credit report that are hurting your score. If you are in a situation where you need to see quick results, like needing to raise your credit score 100 points, these experts can really save the day. It may be worth the money to hire help.
However, when using a credit repair consultant, you must provide them with full transparency. Things that seem trivial to you can impact the outcome of your credit-rebuilding goals. Be honest about everything.
Putting it all together
If you’re looking for ways to increase your credit score for good, then the above-mentioned points in this article will help you achieve that. If your credit score is low, don’t give up.
Pay your debts on time, try not to miss a payment, and review your credit report regularly. If you discipline yourself to have a healthy credit score, chances are, it will keep increasing by 100 points or more.
FAQs about how to raise your credit score 100 points
How to raise my credit score in Canada?
To raise your credit score in Canada, you need to pay your bills on time, keep your credit utilization below 30% of your total credit limit, keep old credit accounts open to lengthen your credit history, limit the number of hard inquiries on your report by not applying for credit too often, and regularly check your credit reports for errors and dispute them if necessary.
Can I raise my credit score by 100 points overnight?
No, there is no way to raise your score by 100 points overnight. Increasing your credit score is a process that takes time and requires consistent, responsible financial habits.
How long does it take to raise my credit score by 100 points?
The length of time it takes to raise your credit score by 100 points depends on several things like your current credit score and credit history. For some people, it may take several months, while for others it may take a few years. Consistently practicing good credit habits is key.
What is the best credit card for raising my credit score?
Even though there isn’t a “best” credit card to raise your credit score, we believe the Neo Secured Card is one of the best credit cards to rebuild your credit for most people. It offers guaranteed approval, a low minimum security deposit requirement of just $50, and up to 15% cash back on your purchases. However, what matters most is how responsibly you use the credit card. Pay your balance on time, try to pay the full balance each month, and keep your credit utilization low. If you’re building or rebuilding credit, you might consider a secured credit card.
Does getting approved for a credit card raise your score?
Getting approved for a credit card doesn’t necessarily raise your credit score. In fact, it may slightly lower your score at first because of the hard credit check made during the application process. Over time, however, responsible use of the new credit card such as on-time payments and keeping your balance low can help to raise your score.
What is the fastest way to raise your credit score?
The fastest way to improve your credit score is to pay your bills on time, pay down the amount you owe on credit cards and lines of credit, and avoid applying for new credit. It’s also important to check your credit report for errors that could be hurting your score because correcting them can give your score credit a quick boost.
Does asking for a credit card limit increase affect your score?
Yes, it can. If your credit card issuer performs a hard credit check to assess if you’re eligible for a credit limit increase, this can temporarily lower your score. However, if you’re granted an increase and don’t increase your balance, your credit utilization ratio will decrease which helps raise your score over time.
Does paying off collection agencies improve my credit score in Canada?
Paying off collections won’t remove it from your credit report, it will stay there for 6-7 years from the date of your first missed payment. However, paying off your bad debt can help future lenders look more favourably on your application. If you have unpaid collections, they can legally prevent you from getting approved for a mortgage in Canada, so it’s important to deal with them.
