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How To Avoid Getting Bad Credit

At Synergy Merchants, we have well over a decade of experience working with Canadian business owners who want nothing more than to simply grow their businesses. The problem faced by many of these entrepreneurs, however, is that they have bad credit.

Thankfully, our unique merchant cash advance program enables them to attain the funding they need without there being any credit checks. However, when these same business owners visited their banks in search for business loans, they were turned down because of their poor credit histories.

So what exactly needs to happen in order to avoid getting bad credit?

Loans Canada explains that the two credit reporting agencies in Canada, Equifax and TransUnion, calculate your credit score based on how you use and pay back credit. They also note that there are five major factors that are used during the calculation of your credit score. These factors are listed in order of the weight they hold when judging an individual’s credit rating.

They are history of payments (35 percent), amount of debt (30 percent), credit length (15 percent), diversity of accounts (10 percent) and new inquiries (10 percent). Since one’s history of payments has the greatest impact on his/her credit score, it’s probably best we look further into how you can avoid bad credit by making payments on time.

“Have you missed any credit card payments or have you ever been late making a loan payment?” asks Loans Canada, “If yes, your credit score was negatively affected. On the other hand, if you always make your credit and loan payments on time then your credit score is probably good, depending on your other financial habits.”

Pay your bills on time each month.

To avoid a bad credit rating, it’s imperative you don’t spend more than you can afford. Unfortunately, far too many credit card users tend to overspend. As a result, they don’t make payments to their credit card issuers on time. This can also leads to greater accruing interest and, in many cases, increased interest rates. Making late payments paints a person as someone who is untrustworthy when it comes to repaying borrowed money.

Of course, this doesn’t just apply to credit card accounts. All of your bills – electric, water, cable, internet, phone etc. – must all be paid on time. On, LaToya Irby affirms that paying your bills on time every month is the number one thing you can do to avoid bad credit.

“Payment history is the biggest factor affecting your credit score, so it’s no wonder that missing payments (by 30 days or more) can devastate your credit score,” she writes, “A single late payment can drop your credit score several points and consecutive late payments can lead to worse things like foreclosure, repossession, charge-offs, and collections.”

Minimize your debt.

As mentioned, the amount of debt you take on is the second biggest factor that influences your credit score. The more you owe, the worse your credit rating is bound to be. Irby also informs that credit scores are determined by the amounts owed on your credit cards in comparison to your credit limits.

“Keep your credit card balances low and make your regular loan payments to reduce the amount of debt you have,” she advises.

As we pointed out before, you don’t have to even think about your credit score when applying to Synergy Merchants’ unique merchant cash advance program! For more information, please don’t hesitate to call us at 1-877-718-2026 or email us at You can also apply online for a free, no obligation quote!

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