Keeping a good credit score is important in Canada. It affects whether you can get loans, buy a house, or even get a job. Here are some common mistakes with credit cards that can hurt your credit score and how to avoid them:
1. Missing Payments
Missing a payment is one of the worst things you can do for your credit score. Even one missed payment can cause your score to drop a lot. Always pay at least the minimum amount on time. Set up automatic payments or reminders so you don’t forget.
2. Using Too Much Credit
If you spend too much of your credit limit, it can lower your score. Try to use less than 30% of your credit limit. For example, if your limit is $10,000, don’t use more than $3,000. Paying off your balance every month is the best practice.
3. Applying For Too Many Credit Cards
Every time you apply for a credit card, it’s noted on your credit report. Too many applications can lower your score and make you look like a risky borrower. Only apply for new cards when you need them.
4. Closing Old Credit Cards
Closing old credit cards can hurt your score. It’s better to keep old cards open, even if you don’t use them much. This helps your credit history look longer and keeps your available credit higher.
5. Not Checking Your Credit Report
Check your credit report regularly to make sure there are no mistakes or fraud. Fix any errors you find to keep your score accurate.
6. Only Paying The Minimum
If you only pay the minimum amount due, you’ll end up paying a lot in interest and it can keep your balance high. Try to pay more than the minimum, or pay off the whole balance if you can.
7. Not Using Credit At All
If you don’t use credit, there’s no record of how you handle it. Lenders need to see that you can use credit responsibly. Use your cards for small purchases and pay them off on time to build good credit.
Conclusion
Avoid these common mistakes to keep your credit score high. Pay your bills on time, use less than 30% of your credit limit, don’t apply for too many cards, keep old cards open, check your credit report, pay more than the minimum, and use your credit cards regularly but responsibly. This will help you maintain a good credit score and get better financial opportunities in the future.
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