Tips for Building a Great Credit Score

Building a strong credit score is an important part of your financial planning. Credit is an important financial tool, and it’s important to know how your credit score is calculated. This way, you can make sure to maintain a great score, which can help for loans, housing, insurance and more.

September 26, 2025

By: Declan Sweeney, Experiential Programming & Outreach Coordinator (Financial Literacy)

What do credit bureaus use to determine your credit score?

Payment history: Approximately 35%

  • The most important part of building a great credit report is paying on time.
  • Late payments that are over a month late will decrease your credit score.

Credit utilization rate: Approximately 30%

  • Credit utilization ratio is the percentage of a borrower’s total credit currently being used.
  • To ensure the best credit score, your credit utilization ratio should be between 20% and 40%. This means that, if you have a $2,000 credit limit, then you should aim to use between $400 and $800 in credit.

      Credit history: 15%

      Credit history is how long you have been using credit. It considers the average age of your current account.

      Types of credit: 10%

      Differentiated lines of credit can help improve your credit score, as this demonstrates responsibility.

      Credit inquiries: 10%

      • Credit inquiries are when a bank or lender checks your current credit score. If there are many “hard inquiries” that have occurred recently, it may show that the person is requesting multiple loans or may have an inability to financially support the amount given.
      • This will not impact you if you are searching for the same type of loan at different financial institutions, so if you were to compare car loans at multiple places, it would not negatively impact your credit score.

        General tips to stay on track

        • Pay your bills on time — on or before the due date.
        • Borrow only what you need and what you can afford.
        • Contact creditors immediately to make alternate arrangements if your payments are late.
        • Credit cards are a convenience. There are there to help when cash is not available — they are not your emergency fund.
        • Review potential credit card offers and determine which align best with your current needs. Ensure proper research through the credit card comparison tool (Financial Consumer Agency of Canada) and Rate Hub.
        • Cut up cards you are no longer using and cancel the accounts at your request.
        • Get help if you’re in debt and can’t handle the payments. Make an appointment with Mac‘s Money Centre by emailing money@mcmaster.ca.
        • Check your credit reports annually for errors or omissions. Report any inaccuracies and supply written proof to both credit bureaus: Trans Union and Equifax.
        • Bank credit cards (Mastercard, Visa) have lower interest rates than retail cards.
        • Understand where you may have the potential for impulse shopping. Create lists and use cash if  you’re concerned about potential overspending.
        • Pay credit card debt in full by the due date to avoid interest charges.
        • Be aware of penalties, charges and interest rates. Understand your card’s terms and conditions.