Amanda Harris was tired of living paycheck to paycheck. After years of juggling credit card bills, car loans, and student debt, she knew something had to change. At the age of 30, Amanda had a credit score of 580 — far from ideal to qualify for affordable personal loans. But in just under a year, she managed to increase her score by 120 points and secured a low-interest personal loan which allowed her to pay off high-interest debts and start saving for the future. Here’s how she did it.
If you’re struggling with debt or looking for ways to improve your credit score for loan approval, read on. Amanda’s story will give you the tools to start your own journey towards better financial health.
Before Amanda could improve her credit score, she needed to understand what it meant and why it was important. Your credit score is a key factor in determining whether you qualify for loans and how much interest you will pay. In Canada, the most commonly used score range is between 300 and 900. Anything above 700 is considered good, while scores below 600 can make it difficult to qualify for low-interest loans.
Amanda’s first step was to check her score with one of Canada’s leading credit bureaus: Equifax or TransUnion. She quickly realized that her score wasn’t just low — it was preventing her from qualifying for affordable credit.
Amanda’s credit score suffered because of the high balances on her credit cards. To improve her credit, she focused on paying off her credit card debt first. To the transhurt her balances to a credit card with 0%</strong interest> in the first 12 months, Amanda was able to save interest and pay off the principal faster.
She also used a budgeting app to track her spending and identify areas to cut, freeing up more money for debt repayment. In three months, she reduced her credit card balances by 30% – an important move to boost her score<. Gt;
One of the main factors that affected Amanda’s credit score was her </strong credit utilization ratio> – the ratio of her credit card balance to available credit. Experts recommend keeping this proportion below 30%. Amanda had been consistently maxing out her cards, which sent negative signals to the credit bureaus.
To fix this, Amanda started paying off her balances faster and also asked for credit limit increases. With a higher credit limit and lower balances, its utilization rate dropped significantly, which led to an improvement in its score.
Next, Amanda took a look at her credit report to see if there were any errors that could be affecting her score. She found a few errors: late payments that had been reported incorrectly, and an account that had been closed but was still showing as open. After disputing these errors with the credit bureaus, his score increased by another 15 points.
It is crucial to regularly monitor your credit report for inaccuracies, as even small errors can negatively impact your score. In Canada, you are entitled to one free credit report per year from Equifax and TransUnion.
With her score rising, Amanda was finally in a position to apply for a low-interest personal loan< / strong>. But not all loans are created equal. She knew she needed to look for the best conditions. Amanda has applied to various banks and credit unions, comparing interest rates, repayment terms, and fees.
She finally decided on a unsecured</strong personal loan> with a fixed interest rate of 6.5%. By using the loan to pay off higher-interest debt, Amanda saved money on interest while consolidating her payments into a manageable monthly bill.
Improving your credit score was only part of the journey. Amanda knew she had to be proactive to maintain her new score. It set up automatic payments for its accounts to ensure it never missed a due date and kept its credit utilization low by using only a small portion of its available credit.
Additionally, Amanda continues to check her credit report every few months to ensure there are no errors and to keep track of any changes in her score.
If you’re looking to improve your credit score and qualify for a personal loan in Canada, start by understanding what’s affecting your score and taking small steps to improve it. Whether you’re paying off high-interest debt, disputing mistakes, or choosing the right loan for your needs, the right moves can put you on the path to financial freedom.
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