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Steps to Stellar Credit

There is a lot of confusing information out there about borrowing money and building your credit score. Questions like: How much of a balance should you hold? How much you should pay back? Well, here are some quick tips:
Pay off your credit card
The average Canadian carries at least $3,500 of credit card debt. Credit cards are a huge source of profit for lenders. This is because credit cards have higher interest rates, typically ranging between 20 – 30%, compared to products such as lines of credit or installment loans. But, it is possible to experience the benefits of a credit card without padding the pockets of the lenders.
The best way to do this is to pay off your credit card in full before the due date. Paying off the balance of your credit card within 21 days means not having to pay interest. As a best practice, treat your credit card like you would a debit card—don’t spend more than you can afford to pay off at the end of the month.
Don’t max out your credit
Whatever credit you use—a Line of Credit or a credit card—keep your credit score healthy by only using the credit that you absolutely need and keeping the balance lower than the limit on your credit. For example, if you have a line of credit with a limit of $5,000 try to only borrow $1,000 – $2,000 from it and pay that balance off before borrowing against it again.
Set up automatic payments
Consider setting up automatic full payment options with your bank or credit union. Life can get busy and we all have been in the situation where we forget to do something that is routine for us. Automatic payments are a great way to ensure that you won’t forget to pay your bills on time. If setting up on automatic payment for the full amount of the balance isn’t possible at this time, you can set up the automatic payments for an amount that works for your budget. Just make sure you are paying off as much as you can and not just paying the minimum.

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