Credit 101: 8 Simple Rules for managing your credit score.

Credit can feel mysterious or intimidating but I’m here to help you navigate and understand exactly what you need to do to build, maintain or repair your credit score.  Most people don’t realize all the things in life that require “good” credit.  As a mortgage broker operating in Alberta, Saskatchewan, and BC, I’m here to help you with getting ready to get a mortgage.  Whether you are buying a house, renewing your mortgage, or refinancing the property you already own, your credit score matters, but not only does your credit score affect mortgage qualification but lots of other areas, from car loans to insurance premiums, rental applications, and even some employment decisions.  

The good news? Credit isn’t about being perfect. It’s about understanding a few key habits and sticking to them consistently. 

Rule #1: Pay your bills on time. Every time.

This one is non-negotiable. A spotless payment history is the single biggest contributor to a healthy credit score.

Ideally, credit cards are paid in full each month. If that’s not realistic right now, the bare minimum is making the minimum payment before the due date — no exceptions. Even one late payment can leave a mark that lingers longer than most people expect  .

Rule #2: Keep balances well below your limits

High balances hurt your score even if you’ve never missed a payment.

As a general rule, try to stay below 50% of your available credit. The closer you get to the limit, the more your score drops. And going over the limit? That’s a red flag and gets recorded on your bureau so even after you pay it down below the limit, lenders know you went over.

Rule #3: Established credit is king

A high credit score comes from a solid track record, not just brand-new accounts.

A strong foundation looks like:

• At least 2 different credit accounts

• Open for 2 years or more

• With limits of $2,000+

This shows stability and responsible use over time, not just short-term credit behaviour.

Rule #4: Not all credit counts the same

This surprises a lot of people.

Rent and utility payments usually don’t show up on your credit report, which means they don’t help build your score even if you’ve paid them perfectly for years.  Some landlords are starting to report to the credit bureau but it’s not easy to do, and it’s another expense for them, so it’s not widespread yet. 

Credit cards, student loans, cell phones, and instalment loans typically do report and actually help establish credit history when managed well.  

Rule #5: Be very cautious with joint or cosigned credit

Cosigning isn’t a “just in case” favour, it’s a full commitment.

Everyone on a joint account is 100% responsible for the debt. That loan will appear on your credit report and will be counted when lenders calculate your debt ratios, even if you never make a payment yourself.

Rule #6: Applying for credit too often can hurt

Each credit application triggers an inquiry, and too many in a short time can drag your score down. 

This commonly happens at car dealerships, where applications may be sent to multiple lenders at once. Mortgages are a bit different whereas multiple mortgage inquiries within a short window are usually grouped together but outside of that proceed with caution in applying for credit “just because”.   Remember, the credit score is just an algorithm that spits out a number, it doesn’t give any motive or backstory, so when there are a lot of inquiries, the assumption built in to that algorithm is that you are relying on credit to get by. 

Rule #7: Don’t close active accounts if you’re rebuilding

This feels counterintuitive, but closing accounts can actually lower your score.

Historic activity is part of credit calculations. Closing an active account removes that activity from the algorithm and can result in a significant drop! 

Rule #8: Know your score — it’s your responsibility

There’s room for context and explanations when telling your financial story, but your credit score itself is black and white.

Mistakes happen in fact, roughly 18% of credit reports contain errors which is why checking your credit before making a big purchase is so important. Early awareness gives you time to fix issues and rebuild if needed.  I work closely with professionals who help people correct their credit full time so if there’s an issue, we’ll connect you and get this looked after.  Connection to experts in every field is one of the big benefits to working with a mortgage broker. 

The bottom line

Credit isn’t about shortcuts. It’s about understanding how the system works and making small, consistent choices that move the needle in the right direction.

And if you’re planning a major purchase, rebuilding credit, or just unsure how your current habits look through a lender’s eyes, a quick conversation can often save months (or years) of frustration.

When in doubt ask. That’s what I’m here for.

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