How to Maintain Your Credit Health
Understanding Your Credit History in Canada
Your credit history is tracked by Credit Agencies—Equifax and TransUnion—starting when you first apply for credit, including services from telecom or utility companies. Your file includes personal details such as legal name (including aliases), address, and employment info.
Financial institutions report to these agencies monthly, providing:
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Type of credit product
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Start date and credit limits
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Current balance and scheduled payment amounts
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Payment status (e.g., on time, or late by 30/60/90+ days)
Agencies also log when and which institution pulls your credit report. This system helps lenders assess your creditworthiness over time.
Smart Credit Use Builds a Strong Credit Profile
Your repayment habits—on loans, credit cards, and lines of credit—significantly impact your credit score. Key factors include:
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Age of your credit history and each credit account
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Number of credit applications within 12 months (recorded as inquiries)
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Balances on revolving credit (credit cards/lines of credit)
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Repayment history, including late payments up to 7 years back
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Total outstanding balances on unsecured credit
Using credit wisely helps you manage finances and prepare for unexpected challenges. A well-structured line of credit or emergency cash reserve can carry you through economic uncertainty and support long-term financial stability.
Credit Health: Do's & Don’ts
✅ Do:
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Make all payments on time—every dollar counts, even on small balances.
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Maintain active credit accounts for at least 2+ years to build a strong history.
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Be selective when applying for loans; multiple inquiries can hurt your score. Mortgage Brokers pull one report for all lenders—it's a smart move.
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Check your credit report regularly. Equifax offers free access to verify accuracy.
❌ Don’t:
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Max out credit cards or lines of credit; stay below 70% of your limit.
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Apply for credit too often—frequent inquiries signal financial stress.
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Delay reporting fraud or identity theft. Prompt action helps protect your credit file.
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Keep unused credit cards open long-term; they may impact debt servicing ratios.
Repairing Damaged Credit
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Credit history builds over time through consistent, timely repayments. Missed payments lead to derogatory ratings, with details on how many months late and the amount in arrears recorded by credit bureaus.
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Derogatory marks are removed after 7 years, giving consumers a legal fresh start.
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During financial hardship, avoid applying for new credit. Instead, assess the root cause—income or spending—and create a budget. Debt consolidation with a lender can lower payments, while maintaining good-standing accounts preserves your positive record.
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Close delinquent accounts promptly to begin recovery.
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In severe cases, creditor relief options like Consumer Proposals or Bankruptcy may help. While they can eliminate portions of debt, credit recovery still takes time.
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Consider reaching out to organizations like the BC Credit Counselling Society, a non-profit offering budgeting support, payment planning, and financial education.
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Be cautious of creditor relief services charging excessive fees—research before committing.
Access Your Equifax Consumer Report for Free
Scan the QR Code or click on it to be directed to Equifax Canada website.
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