Your credit score can make or break your relationship with lenders. Lenders look at a variety of factors when trying to approve you for a loan and your score is one of them. You score can be anywhere from 300 to 900, but most scores fall between 399 and 862 - the higher your score, the better. A score of 750 puts you at "midpoint" with the national credit bureaus. Once you pass that point, your credit rating jumps from "fair" to "good," but some lenders have lower expectations than credit bureaus. They may consider a score around 699 to be midpoint with a score of 726 or higher beaming with excellency.
But if you're tired of boasting any score worthy of a nod - hey, to each their own - here's how you can drop into the low zone in a hurry.
Blowing it with the bureaus
1. Hold a high balance on your revolving credit
Lenders look at how much credit is available to you and compare it against how much of that credit you are using at any given time. If you hold a higher balance on your revolving account, it may be an indicator that you have a hard time paying that balance down - even if you pay your account as agreed. This a great way to avoid moving up that credit rating scale.
2. Keep applying for the same old type of credit
If you have a diverse portfolio of credit you've been approved for or have paid off, lenders are more likely to approve you for more credit. All credit account types will fall into installment, open, or revolving credit types. Installment accounts mean you were lent the full amount up front with the expectation of paying it off in small chunks as agreed. Open accounts require you to pay the full outstanding amount every period, so the risk lasts for a much shorter period than with most accounts. Revolving accounts require you to pay a minimum amount every period, meaning you can be trusted to manage outstanding debt. Can you handle all three types of accounts? Probably, but they don't need to know that! The best thing you can do to avoid increasing that credit score is to keep the account types in your portfolio as homogenous as possible.
3. Make as many credit inquiries and applications as you can
Credit lenders hate to see a long list of inquiries into your credit rating. It indicates two things: you require a lot of credit; and, unless they've all been approved, other lenders saw too great a risk in approving you for credit. So the best way to waste both yours and your lender's time is to walk into their office with a mile-long list of past inquiries and a freshly-signed application to add to it.
4. Have minimal credit experience
You can't really control this one once your oldest credit account is at least four to five years old, but if you're still under that threshold, make sure to apply for as much credit as you can now. Credit lenders look at how old your oldest credit account is because it can be a good indicator of your level of experience with borrowing. Applying for more credit than what your experience indicates you can handle will ensure you derail your credit score before it has a chance to get on the right track - and we wouldn't want that!
5. Pay your accounts NOT as agreed
Your ability to pay off your debt is indicated in a payment pattern grid attached to each of your accounts. The grid tells lenders how many months have been reviewed (which gives them a good idea of your history) and how many times you've paid your bills more than 30 days late, more than 60 days late, and more than 90 days late. If a lender looks at this grid and sees a high number in any one of the spaces (aside from the number of months reviewed), they can probably expect to see a low number when they flip the page to your credit score.
6. Keep quitting jobs and finding new ones - then report it to the national credit bureaus
Your employment stability affects your score too. If you want to lower that score and keep it low, make sure it's well known that you float from job to job. Credit lenders can determine you're a riskier candidate when they see that you're usually between jobs or are more often in a probationary period with your employer than not.
How your credit standing compares (and how to find out!)
You can contact a national credit bureau, such as Equifax or TransUnion for your most recent credit report. The only credit inquiries that impact your score are the ones made when you're applying for new credit, so this one won't count.
In Canada, delinquency rates are hovering around the lowest they've been in 9 years, according to Equifax's March 2013 Canadian Consumer Credit Trends report. According to data used by Equifax, 25 to 50 percent of the Canadian population has a "fair" credit rating - between 650 and 750. Another quarter of the Canadian population fall between 750 and 799, with the national average being at 720.