If you want to get the credit you need – and if possible at a favorable interest rate – it is best to invest in a good credit rating than your prettiest smile. This number, between 300 and 900, assigned by a credit bureau represents your “solvency”, i.e. your ability to pay.

How you use your credit card has a big impact on this rating. And because it’s the most common form of credit in Canada, it’s the easiest and most accessible way to maintain your rating or raise it if necessary, says Éric Métivier, insolvency practitioner and partner at Roy Metivier Roberge.

Two Canadian credit bureaus, Equifax and TransUnion, jealously guard the details of their calculations to determine your score. However, we know the factors that affect it, up or down. For example, payment history is approximate 35% of the calculation, reveals Equifax; the age of the accounts, 15%; adverse public data (e.g. bankruptcy), 10%. But neither Equifax nor TransUnion agreed to say more and answer my questions. In short, a credit rating is a bit like the Caramilk secret: we have the ingredient list, but we don’t know exactly how it was made.

Even after 40 years in business, Éric Métivier has not solved the riddle. But he knows very well how to use a credit card to get a bad result. We asked him to add his advice to those commonly offered by experts to take full advantage of this tool.

Have at least one credit card…but not too many

To have a good file, you must already have had credit. It is therefore advisable to purchase and use a credit card to build up a history. According to TransUnion’s website, “Activities lasting six months provide enough information to earn a score”.

Raymond Chabot, a licensed bankruptcy trustee, advises on its website to only use one card because having more than one “suggests your chances of becoming over-indebted are high”. In the eyes of Éric Métivier, the most important thing is not to ask for new ones too often and to limit the number. “Repeated requests hurt your rating because you look like you’re urgently looking for new credit,” he says. For the same reason, it is better not to give in to all card offers from stores.

Pay off your balance in full

Éric Métivier lost the number of clients who came to his office thinking that paying the minimum monthly due was enough to guarantee them excellent credit. Finding that it’s far from brilliant leaves some amazed, he says.

By only paying the minimum amount, not only do you see high interest – typically around 19% – on your balance, you also hurt your credit score.

Of course, to improve it, you also need to pay your balance on time every month. “Your payment history is the most important factor for your creditworthiness,” says theconsumer agency in Financial Matters of Canada, a federal organization that protects the rights and interests of consumers of financial products and services.

“If you miss the deadline just once because you forgot to pay, it won’t haunt you for long,” says Éric Métivier. But if your payments are several weeks late each month, it’s damaging because it tends to show that you need your last paycheck to settle your account balance. He recommends making your payment five days before the due date to ensure it arrives on time.

Keep your cards for a long time

Having the same cards in your wallet for years scores points. “It’s a way of showing lenders that you’re capable of stability,” notes Raymond Chabot. And if you only want to keep one, keep the oldest one.

Éric Métivier leads by example: he has had the same American Express card since 1981. “If I can keep her for 40 years, that tells the credit bureaus I have some salary stability. »

However, an unused account will not improve your rating. “Use it occasionally to keep it active,” advises the Financial Consumer Agency of Canada.

Do not use your entire lending capacity

Éric Métivier advises using only 30% of the credit you have, the Financial Consumer Agency of Canada calls 35% and Raymond Chabot recommend not to exceed 50%.

It is in your best interest to go beyond your credit card limit. “If you have a limit of $10,000 and use $3,000, that’s fine. If you’re only using $2,000, it’s even better, says Éric Métivier. It shows that you are not overusing credit. »

If you intend to reach your card’s limit, it is in your best interest to ask your financial institution to increase it. According to Equifax, the ratio of the balance to the total available balance is an important factor: it accounts for about 30% of the rating.

be patient

If you’ve made a few missteps, your credit score could remain low for months. “It goes down faster than up,” notes Éric Métivier. However, this experienced fiduciary estimates that with good credit habits, you can improve your rating within… a year or two.

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