Your credit score works quietly in the background of your financial life, shaping the rates and options available to you when it matters most. The good news is that many of the habits that chip away at a score are fixable once you know what to watch for.
1. Carrying a High Credit Utilisation Ratio
Credit utilisation — the percentage of your available revolving credit that you're actually using — is one of the most heavily weighted factors in your score. Aim to keep balances below 30% of each card's limit. Even if you pay in full every month, a high balance on your statement date can register as high utilisation.
2. Applying for New Credit Too Often
Every time a lender pulls your credit report for a new application, a hard inquiry is recorded. One or two won't cause serious harm, but several in a short window can signal financial stress to lenders. Rate-shopping for a mortgage is treated differently — multiple mortgage inquiries within a short period are typically grouped as one — but be more cautious with credit card and line-of-credit applications.
3. Closing Old Accounts
Closing a credit card you no longer use might feel tidy, but it can shorten your average credit history and reduce your available credit limit — both of which can lower your score. If there's no annual fee, consider keeping the account open with occasional small purchases.
4. Missing Payments — Even Small Ones
Payment history is the single largest component of your credit score. A missed payment on a small balance can still be reported to the credit bureaus and stay on your report for years. Setting up automatic minimum payments is a simple safeguard.
5. Not Checking Your Report for Errors
Errors on credit reports are more common than most people realise — incorrect balances, accounts that aren't yours, or outdated information. In Canada, you can request a free copy of your credit report from both Equifax and TransUnion. Reviewing it once a year takes under 20 minutes and gives you a clear picture of where you stand.
A note: This article is for general awareness only and is not personalised financial advice. For guidance specific to your situation, consider speaking with a licensed mortgage professional or financial adviser.