A low credit score can make life more difficult. It can be harder to get loans, and the loans you are eligible for will likely come at a higher interest rate. Knowing how to improve your credit score isn’t just nice-to-know information — it can actually improve your life.

If your credit score is lower than you’d like it to be, you’re not stuck there forever. Credit repair is possible.

How to improve your credit score? These steps can help.

Step One: Find out your credit score.

It may seem obvious, but if you don’t actually know your credit score, you’ll want to find it out before you can begin your credit repair. In Canada, the two main credit reporting agencies are TransUnion and Equifax. Both let you get your credit report online for a small fee.

Once you know your credit score, you can go about improving it. Your credit score will be a figure between 300 and 900. The higher the number, the better your credit score. Most banks require a credit score of 680 for financing.

Step Two: Identify the cause

Your credit score can be hurt in numerous ways. Too many credit applications, late payments, and an excessive amount of debt are just some of them. But knowing what your problem is will help you identify a solution.

In addition to your credit score, your credit report will tell you the number of times you’ve inquired about credit. More than four inquiries per year can hurt your credit score.

Your credit report will also detail your past collections, Bankruptcies, and Consumer Proposals. It will also show your tradelines — where your credit, such as loans, credit cards, telephone companies, mortgage companies, and other businesses that extend credit may report your payment habits. Looking at this information can help you identify where you need to correct course.

Step Three: Make a plan to correct.

Once you know the cause, you can identify how to improve your credit score.

If your credit is bruised due to late payments, set up calendar notifications so you make your payments on time, or set up automatic payments. If you’re making too many applications for credit, limit the amount that you ask for in a year to less than four. Try to pay your bills in full, rather than always making the minimum payment. And stay under the maximum limit on your credit card.

If your credit rating is hurting because of excessive debt and too much credit, your first step to getting back on track would be to eliminate some of that debt. You can’t begin rebuilding credit until the debt is dealt with.

If you have a small amount of debt — under $8,000 — you’d likely be able to consolidate debt through smart budget planning and lump sum payments of what is owed.

If the amount you owe is more than you can reasonably pay back through budgeting alone, you’ll need to explore other options. If you own a house and have equity available, a mortgage refinance may be able to consolidate your debt. If you have good credit, but a high amount of debt, a bank may be willing to give you a consolidation loan or a line of credit.

If those aren’t an option, the next solution to look at would be a Consumer Proposal or Bankruptcy. While both options would impact your credit score, the effect would likely be no worse than having defaulted credit products on your credit report.

Fuller Landau Debt Solutions can give a personalized analysis of how to improve your credit score. Contact us today to schedule a free consultation. Call (416) 927-7200.