How to Improve Your Credit in Canada: 8 Proven Strategies

Understanding Your Credit Score

Before diving into improvement strategies, it’s important to understand what influences your credit score in Canada:

Payment History (35%) Your track record of making payments on time
Credit Utilization (30%) How much of your available credit you’re using
Length of Credit History (15%) How long you’ve had credit accounts
Credit Mix (10%) Variety of credit types (cards, loans, mortgages)
New Credit Inquiries (10%) Recent applications for credit

Step 1: Get Your Free Credit Reports

Start with the basics:

• Request free credit reports from Equifax Canada and TransUnion Canada
• You’re entitled to one free report per year from each bureau
• Review every detail for errors, outdated information, or fraudulent accounts
• Note any missed payments, collections, or accounts you don’t recognize

Pro Tip: Set a calendar reminder to check your credit report every 6 months to stay on top of your credit health.

Step 2: Dispute Errors and Inaccuracies

Credit report errors are more common than you might think. Here’s how to fix them:

Common errors to look for:

• Payments marked late when you paid on time
• Accounts that don’t belong to you
• Incorrect account balances or credit limits
• Outdated information (negative items older than 6 to 7 years)
• Duplicate accounts

How to dispute:

1. Contact the credit bureau in writing with supporting documentation
2. Include copies (not originals) of relevant documents
3. Be specific about what information is incorrect
4. Follow up in 30 to 45 days if you don’t hear back

Step 3: Pay Down High Credit Card Balances

Target your credit utilization ratio:

• Aim to use less than 30% of your available credit
• Even better – keep utilization below 10% for optimal scores
• Pay down the highest utilization cards first
• Consider making multiple payments per month to keep balances low

Strategic approach: If you have $5,000 in total credit limits, keep your balances below $1,500 total across all cards. This single change can boost your score by 50 to 100 points within a few months.

Step 4: Set Up Automatic Payments

Never miss a payment again:

• Set up automatic minimum payments on all credit accounts
• Schedule payments for a few days before the due date
• Pay more than the minimum whenever possible
• Consider bi-weekly payments to reduce interest and principal faster

Recovery timeline: If you’ve missed payments, consistent on-time payments for 3 to 6 months will start showing positive changes in your credit profile.

Step 5: Keep Old Accounts Open

Length of credit history matters:

• Don’t close your oldest credit cards, even if you don’t use them
• Older accounts boost your average account age
• Keep these accounts active with small, regular purchases
• Pay them off immediately to avoid interest

Exception: Close accounts with high annual fees that you don’t use, but weigh the cost against the credit history benefit.

Step 6: Diversify Your Credit Mix

Responsible credit variety helps your score:

• Mix of credit cards, installment loans, and lines of credit
• Don’t open new accounts just for variety – only when you need them
• Consider a secured credit card if you’re rebuilding from scratch
• Car loans or small personal loans can add positive variety

Step 7: Limit New Credit Applications

Each application creates a “hard inquiry”:

• Multiple inquiries in a short period hurt your score
• Only apply for credit you actually need
• Shop for rates within a 14 to 45 day window (counts as one inquiry for mortgages and auto loans)
• Wait at least 6 months between credit card applications

Step 8: Consider Professional Help When Needed

Sometimes you need expert guidance:

• Non-profit credit counseling for budgeting and debt management
• Licensed Insolvency Trustees for formal insolvency proceedings (note: we help connect you with qualified LITs but are not trustees ourselves)
• Financial wellness consultants for comprehensive credit rebuilding support and education

Important: Only Licensed Insolvency Trustees (LITs) are authorized to file consumer proposals or bankruptcies in Canada.

Warning signs you need professional help:

• Debt payments exceed 40% of your income
• You’re only making minimum payments
• You’re using credit to pay for basic necessities
• You’re considering debt consolidation loans with high interest rates

Quick Wins for Immediate Improvement

Actions you can take this week:

1. Pay down credit cards below 30% utilization
2. Set up automatic payments on all accounts
3. Request credit limit increases on cards in good standing (don’t use the extra credit)
4. Update your address with all creditors if you’ve moved
5. Pay off any small collections under $500

Timeline: What to Expect

Month 1 to 3: Payment history improvements, lower utilization ratios

Month 3 to 6: Noticeable score increases from consistent positive habits

Month 6 to 12: Significant improvement if you had serious issues

Year 2+: Excellent credit possible with consistent effort

Remember: Credit improvement is a marathon, not a sprint. Focus on building sustainable financial habits rather than quick fixes.

Red Flags: Avoid Credit Improvement Scams

Legitimate credit improvement never involves:

• Upfront fees before any work is done
• Promises to remove accurate negative information
• Advising you to dispute everything on your report
• Creating a “new credit identity” with a different Social Insurance Number
• Guaranteeing specific score improvements

Building Long-Term Credit Health

Sustainable habits for lasting success:

• Budget regularly to avoid overspending
• Build an emergency fund to avoid relying on credit
• Monitor your credit monthly with free tools
• Educate yourself about personal finance and credit management
• Celebrate milestones as your score improves

Your Next Steps

Improving your credit health takes time, but every positive action moves you closer to your goals. Start with the quick wins, be patient with the process, and stay consistent with your efforts.

Need personalized guidance? Consider working with a financial wellness consultant who can support you in developing personalized habits and a strategy for rebuilding your credit health.

📄 Want this guide for later? Download the PDF version to keep these strategies handy and share with family.