Check Your Credit History
First, get your credit history from Equifax or TransUnion, the main credit rating agencies in Canada. This will show your credit score and help you verify that the information in your file is correct. If there are mistakes, contact these agencies to have them corrected.
2. Improve Your Financial Habits
- Pay Bills on Time: Even one 30-day late payment can significantly impact your credit score.
- Pay Off Credit Cards Monthly: Try to pay the full balance each month.
- Use Credit Wisely: Keep your credit usage below 30% of your limit.
- Limit Loan Requests: Only apply for loans when necessary to avoid too many credit inquiries.
3. Work with the Right People
Teaming up with associates who have excellent credit can improve your financial profile. It’s important to have a lawyer draft an agreement that outlines everyone’s roles and responsibilities to protect all parties involved.
4. Find a Guarantor
A friend or family member with good credit can act as a guarantor on a loan. The guarantor’s assets and credit history will be considered by the lender. They should be fully aware of their commitment, as it will appear on their credit history and could affect their borrowing power.
5. Be Proactive to Avoid Credit Damage
Don’t wait until you’ve exhausted all your savings before approaching a banker. Once your credit history is damaged, it’s much harder to improve your rating.
6. Structure Your Business Properly
Incorporate your business to separate its credit from your personal credit. Plan your project thoroughly, including how you will repay any borrowed money and explore other sources of start-up financing. This preparation will increase your credibility with lenders.
