Jonathan Mercier

By Jonathan Mercier

December 11, 2015


Does Your Credit Make the Grade?

Article revised on 27 July 2017

Buy now, pay later

Like thousands of consumers, you’re constantly bombarded by all kinds of promotions aimed at getting you to buy something now that you can’t afford and pay for it later.

However, according to a February 2015 study conducted by the management consulting firm McKinsey, the ratio of indebtedness on available income (income after taxes) for Canadians is 162%! The results that arise from this alarming statistic have a negative effect on credit ratings for those who decide to roll the dice in this dangerous game.

The credit rating

What about your payment habits and your credit history? In Canada, Equifax and TransUnion are two credit reporting agencies that gather information on how you use the credit that is available to you (credit cards, loans, instalement purchases, etc.). They use this information to establish your credit score, commonly known as the credit rating. This rating is then used by lenders, property owners and even your insurer, to determine the risk level of doing business with you.

How can you improve your credit rating? Here are 10 ways to do it:

  1. Use less than 35% of your available credit.
  2. Make your monthly payments before the deadline.
  3. Don’t own more than a couple of cards with high credit limits.
  4. Keep an old credit account open, even if you no longer need it.
  5. Keep loans to a minimum.
  6. Own a combination of diverse credit products (cards, lines of credit, loans and mortgages).
  7. Be sure you can pay back the money you borrow.
  8. Draw up a budget: Plan your expenses according to available income (after taxes).
  9. Try to avoid deferred payment financing plans.
  10. Set up a payment plan and consider reimbursing debts with the higher interest rates first.

To learn more about your credit rating, read Understanding your credit report and credit score by the Financial Consumer Agency of Canada at

Need more information?
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