Improving my credit score

[brwonsugal]

I feel as though I've read every book ever written for improving your credit score in Canada, but none answer this question.

My credit score is a pitiful 440 (Don't even ask how since I haven't had a mortgage or bankruptcy or anything like that)

I have a few cell phones and a credit card and my student loan on my report. (All closed due to non payment except for my student loan which is active and paid ontime)

If I pay off those cell phones and credit card that are closed, will my score move up, or do I have to pay everything and then slowly build my credit again?

I'm trying to decide when to buy a house and how soon I can do so. Also, I know it varies, but how much points would an ontime payment give me (wondering how long I can expect to get to a credit score of 540, then 650)

[marstec]

I'm not an expert, but I would think that you would need to pay all your bills on time for years, rather than months in order to better your credit score. The decision to buy a house may not be yours to make...I can't see a bank giving you a mortgage any time soon.

A lot of people are in serious debt, but those that pay on time, even if it's the minimum, are proving to the financial institutions that they can be trusted with credit.

[ashedfc]

have you considered the options of "Rent to Own" kind of homeownership..

But in my personal opinion, I would suggest, don't buy a house now (maybe a serious housing correction is around the corner; you may be able to buy the same house lsater a lot cheaper than today's price).. keep patience & accumulate your downpayment..

[Insane]

http://www.bankruptcycanada.com/Cred...air-Canada.htm

It talks about improving your score after bankruptcy but the idea is the same for any low credit score. When you say closed due to nonpayment, you mean it went to collections? In which case your credit score is low because of that.

[MortgageQueen]

440 is a very low score. You must have has more then a few collection accounts. The best thing to do now is pay all your bills on time every month! Meanwhile, save both a downpayment and invest in an RRSP. . .even if it's only $50 a month. It will show a potential Lender in the future that you are capable of saving and being responsible.
If you have or can get a credit card right now. . .use it every month and pay it off early.

[jayne_a]

you should get your report and check for errors too. I had a low score so i checked my report. It said i had R9 on my car loan for non payment. I called up the company i had my car loan through. And asked why it was reported as bad, when i never missed a payment and I paid it off 3 years early. It was just a clerical error which they submitted a new rating for it, and my score went up.

[LandlordBill]

I'm very experienced with the credit bureaus.

If you can, pay off our bills.

Then, choose one of your credit cards...and USE IT USE IT and USE IT. For everthing. Then MAKE SURE YOU PAY THE BILL ON TIME.

You can raise your score quickly, except you have to show the credit bureaus you (a) use credit and value it (b) have started to pay your bills ON TIME.

You can do it!

[brwonsugal]

how much points would an onetime payment give me? how long I can expect to get to a credit score of 540, then 650

[Kayotic]

Its not really possible to tell you how much one on time payment will increase your score as the credit bureau calculations are very complex. From what it sounds like you only have one active credit account (your student loan) and you should have at lease 2 active accounts in good standing if you plan on eventually buying a home.

Credit scores are determined by 35% Payment History, 30% Utilization, 15% Length of Credit History, 10% New Credit, and 10% Credit Mix.

Its important to have revolving credit accounts such as a credit card so that you show that you can use credit and pay it off on time. Student loans are not as favourable in the credit calculation mix as they are easy to obtain installment accounts.

I would suggest that you obtain a Secured Credit Card and use it and pay it off every month. After you have proven that you can use credit you can ask to have the deposit back.

I would also suggest that you make sure you clear up any collections you have first before saving for a down payment for a home so that you can have them come off your credit report as soon as possible.

If you are going to buy a home with less than 20% down most lenders will want to see 2 active credit accounts with usually a credit limit of over $2,000 and that you have paid them on time for 2 Years to show that you are responsible with your credit. You will want to aim for a credit score over 620 preferrably over 680. Sometimes the lower the credit score the higher the interest rate you will have to pay for a mortgage.

A credit report is a working document so do your best to clear up the bad items and they will eventually drop off your report.

Hope that helps!