How to Fix Bad Credit and Improve Your Credit Score Fast

January 17, 2018

57% of Canadians don’t check their credit scores. Do you know the credit tips that can help repair your score? Don’t miss these five easy ways to fix bad credit and improve your credit score fast!

It’s never too late to fix bad credit and improve your credit score! Credit has the power to determine your quality of life by controlling things like being granted a residential lease, a mortgage, or purchasing a vehicle.

A poll by Ipsos found that over half of Canadians have never attempted to obtain their score (57%). If you've found this blog post, you are already in better shape than them.

What is the fastest way to improve your credit score?

Reduce your Credit Utilization Ratio by Paying down down Credit Card debt

If you paid off all of your Credit Cards and Line of Credit today, you could see an immediate and noticable credit score improvement. This is because having a high Credit Utilization Ratio can weigh down your credit, but it's something you can take immediate action on.

What are the two biggest factors in your credit score

Initially, let's focus on the two biggest factors that determine your credit score.

1. Credit Utilization Ratio: 30%

The fast way to improve your credit

Your Credit Utilization Ratio makes up 30% of your Credit Score. Credit utilization ratio is the percent of your revolving credit that you have used on your credit card or line of credit. A maxed out credit card would have credit utilization of 100%.

2. Payment History: 35%

The slower, but equally as important way to improve your credit

By making regular on time payments on accounts with good history, you will see a noticable improvement in your credit score over time. Payment history won't improve your credit score as fast as fixing your credit utilization, but since positive payment history makes up 35% of your score, it's more important in the long-run.

What are some other ways to start improving your credit score?

Unfortunately, your credit won’t fix itself. There are steps you need to take if you want to fix bad credit, and educating yourself is the first step to success. These five tips will help you fix bad credit and improve your credit score fast:

  1. Get a product of credit
  2. Payment History & making payments on time
  3. Have both installment and revolving credit on your file
  4. Apply for credit thoughtfully
  5. Monitor your credit score every month

Fix Credit Fast in Canada Infographic

1. Get a product of credit

The only way you can prove to lenders that you’re responsible and capable of paying back credit is to make sure you’re actively using a product of credit. This can be a credit card, line of credit, car payment, or a secured credit builder loan to name a few.

2. Payment History & making payments on time

If you have multiple lines of credit that are all sitting at max capacity, we know how stressful it can be, especially after the holidays. However, if you don’t make payments on your credit, it won’t get better. Payments should be on-time and at least the minimum. If you’re struggling with making minimum payments, you might want to research your options – consumer proposals, debt management programs or a debt consolidation loan could be extremely helpful to you!

3. Have a mix of both installment and revolving credit on your file

There are two kinds of credit that are accounted on your report – installment and revolving. Otherwise known as “mixed credit”, Canadians who have both installment and revolving credit on their file tend to have a higher credit score compared to those who only have one or the other. Installment credit is a type of credit that has a term and a fixed payment (i.e. auto financing and personal loans). Revolving credit is any credit that once you pay off becomes available to you again (i.e. credit cards or lines of credit).

4. Apply for credit thoughtfully

Inquiries made on your credit file differ. Soft credit inquiries do not affect your credit score and are only used for informational purposes; if your work does a background check, if your financial institution pre-approves you for a loan, etc. Hard inquiries are made when a lender pulls your credit to see if you’re eligible for a loan. Any hard inquiry made on your file could have a small impact on your credit score, so it’s important to be mindful if you’re applying for multiple loans. Luckily, the credit bureau counts all inquiries made for an auto loan within a 45-day period as one inquiry, so customers can shop around without having their score heavily impacted.

5. Monitor your credit score every month

Pro tip: Find out how monitor your credit score for free every month... Or skip to the answer.

Your Credit Report is a summary of your credit history, and every time you borrow money from a lender it is documented on your credit report. Personal financial history like missed payments, your SIN number and any opened accounts can be accessed by lenders and financial institutions through credit reporting agencies. The two agencies in Canada are TransUnion Canada and Equifax Canada. Your financial activity stays on your credit report for up to seven years, so it’s never a bad idea to request a free copy of your credit report to evaluate your history and ensure that everything is correct. Checking your credit report is also a great way to avoid any fraudulent activity on your file. Keeping a watchful eye on your report could be the difference between getting approved for a loan or not.


It’s not too late to fix your credit. In fact, any time of the year is a great time to start educating yourself about financial literacy. A car loan is a great way to start building payment history. Apply Today!

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