If you want to increase your chances of landing a perfect credit score, follow these five steps. While there’s no guarantee you’ll achieve perfection, at the very least, you could improve your score.
1. Never Miss a Payment
Since payment history accounts for 35% of your credit score, it’s important to pay all your bills on time. After your payment becomes 30 days late, your creditors may report it to one of the two major credit bureaus— Equifax or Transunion. This can damage your credit score, and the late payment can remain on your credit report for up to seven years.
To decrease your chances of missing a payment, enroll in autopay or use a bill management app to get reminders and view all your due dates at once.
2. Keep Your Credit Utilization Rate Low
The second most important credit score factor is your credit utilization ratio—it accounts for 30% of your score. Your credit utilization ratio measures the amount of credit you use versus the amount you have available. While it’s usually recommended to keep your credit utilization ratio below 30%, a ratio closer to 0% will help boost your credit score even more.
3. Don’t Apply for Credit Too Often
When you apply for a loan, a lender pulls your credit, which causes a hard credit inquiry to show up on your report. This inquiry remains on your report for up to two years. According to FICO, each new hard credit inquiry can lower your score by up to five points. Although the impact of this type of credit check lessens over time, it could keep you from having a perfect credit score.
4. Review Your Credit Reports
Credit report errors happen. If a creditor reports negative information that’s inaccurate or incomplete to the credit bureaus, it can damage your credit score. To catch and fix reporting errors, review your credit reports at least once a year, which is something you are entitled to do for free under Canadian law. You can request your annual free credit report by filing a consumer disclosure with Equifax or TransUnion through the instructions here and here.
You can view both your credit reports for free by visiting either Borrowell.com (Equifax) or CreditKarma.ca (TransUnion) and signing up for a free account.
5. Become an Authorized User
If you don’t have a lengthy credit history, ask a family member who has excellent credit to add you as authorized user on their oldest credit cards. Your score can increase if the credit card issuer reports information to the credit bureaus for authorized users. However, the downside is that your score can decrease if the primary cardholder misses a payment and it’s reported on your credit report.