5 Factors Hurting Your Credit & 5 Ways To Improve It | Refresh Financial

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5 Hidden Factors Affecting Your Credit & 5 Ways To Improve Your Credit Score


Recently, we talked about why millennials are having trouble building good credit. We touched on a lot of reasons why this may be the case, from not using credit, to just a general laid back approach to it. These reasons extend beyond just millennials and tend to have something to do with a lot of different types of people having poor credit. Beyond them, there are more common reasons, like bad repayment habits or using too much credit.

5 Ways Your Credit Is Being Hurt

Most of us have a pretty good understanding of what leads to poor credit, but sometimes your credit can take a hit from things we never expected. Here are a few things that can hurt your credit you may not have thought about:

1. Medical bills

Because they are not recurring, sometimes we forget about or undervalue bills for things that are not covered in Canada by our healthcare. These bills can and often do get sent to collections and we all know what happens next. It’s good practice to get these medical bills out of the way when you first get them, so that interest and late fees don’t pile up on you. Also, by paying right away, you won’t lose track of it because it’s not a regular bill.

2. Not using your credit card

While this may not damage your credit, you may end up with no credit. This makes things just as difficult for you. Even though you’re not living beyond your means and living off credit, you will still be given higher interest rates than those people who have excellent credit.

3. Not diversifying your credit

Your credit report should prove that you can juggle multiple forms of credit at once, especially if you plan to have a mortgage one day. Getting a mortgage usually means you will have to manage more than one form of credit. Mortgage lenders want to see that you have managed that easily in the past.

4. Just one late payment

Late payments are referred to as a “derog” or a derogatory. One late payment alone on your credit report can bring your credit score down and indicate that you are a risk for potential lenders.

5. High credit card balances

Your credit usage should stay around 30% in order for your credit score to continue to go up. If you start to go above 50% usage, you are more than likely starting to look at a decreasing credit score.

5 Ways To Improve Your Credit Score

While you may not have thought of these things as issues that will affect your credit, they do and maybe they have. It’s nothing to get stressed out about though, because building credit can be easy. All you need is some self-discipline, a little willpower, and commitment to bettering your credit score. Follow these steps and you’ll have better credit in no time:

1. Pay down debts

Debt can feel insurmountable at times. The best strategy in dealing with them is to bite the bullet and pay them down as much as you can. The ideal number for your credit usage is around 30%. If you can afford to, make the payment.

2. Use your credit card in moderation

Make regular use of your credit card, but always make sure to pay off what you use. Again, the ideal percentage of usage should be around 30% or lower.

3. Pay bills on time

Delinquent payments are to be avoided like the plague. It is essential that you pay every bill on time, always. There are zero exceptions to this. Pay close attention to the payment due dates, in addition to how long it takes payments to process on each bill.

4. Get a secured credit card

If you are having trouble getting a credit card, it makes sense for most to obtain a secured card from your favourite financial institution. Doing this will allow you to establish good repayment habits and they will be reported to the credit bureaus.

5. Credit building program

There are many options available to you in order to start establishing good credit. We suggest getting started on the Refresh program from Refresh Financial, and by taking advantage of the Financial Intelligence Training (F.I.T.). This is a quick and painless way to improve your credit score, and help you start taking control over your financial situation.

Join A Trusted Credit Rebuilding Program Today

There seems to be an infinite number of ways you can find yourself in financial trouble and struggling with a poor credit score, but rebuilding credit is not as scary or intimidating as you may think. Just take it one payment at a time, don’t overspend, and establish good habits. When it comes to rebuilding your credit, the most important step is the first one.

What are some of the unexpected ways your credit has been affected? Click the pop up below to chat with one of our care team and discuss how you can get on the path to establishing good credit today!

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