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Credit fix: Simmons recommends getting a credit card with a low maximum balance of $500 or $1,000 and using it to automate payment of a cell phone bill or Netflix subscription.
4. You’ve made too many applications in a short time
Another 10% of your credit rating hinges on whether there’s been a lot of credit inquiries in a short period of time. “There are allowances made if you’re shopping for a car and there’s five inquiries for that particular transaction,” says Betz. But if you’re applying haphazardly for various loan products, that signals to the bureau that you may be in a financial bind.
Credit fix: Be mindful; don’t apply for a new card or loan unless you really need it. Best to avoid promotional offers at retail stores for a special discount off your purchase if you apply for a store card on the spot.
5. You don’t have enough types of credit
The final 10% of your credit rating is based on the types of credit you hold. The bureau would rather you have a mortgage, line of credit or car loan than just a handful of credit cards.
Credit fix: If you only have cards, you may wish to add a line of credit and move some transactions there. Just like with investing, diversification can be good for your credit.
6. You don’t have a credit card with a major bank
Similarly, while credit cards are among the best tools for demonstrating and building good credit, they’re not all considered equal. Canada’s big six banking institutions are also known as “Schedule A” or “Schedule 1” banks. “More weight is given to a schedule A bank than a store credit card,” says Betz. The credit bureau knows there’s a guy at the grocery store who’ll track you down in the dairy aisle and set you up with a card—even if your credit is mediocre.
Credit fix: Ensure you have a major bank credit card in your name. Banks are choosier about their credit customers, so those cards raise your score faster.
This article was originally published on Sept. 11, 2019, and updated on Oct. 6, 2022.
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