For any type of loan or financial agreement in Canada, you will undergo a credit check. For people with a good credit history, this is nothing to worry about. However, a credit score can be the make or break between getting approved and not. 

Having bad credit can decimate your chances of approval, so if you’ve got bad credit, you may wonder what to do about it. Luckily, there are ways to improve your credit score to increase your chances of approval.

In this article, we’ve explored the best ways to improve your credit score based on our experience. Take a look now to find out how you can increase your chances of approval in no time.

What is a Credit Score?

A credit score is representative of an individual’s creditworthiness. The score itself is based on information on a credit report. This information makes up a detailed record of a person’s credit history.

The higher the credit score, the lower the risk of a person defaulting on a payment. Credit scores range from 300 to 900. A good credit score is around 660+.

Several factors affect your credit score, including your payment history, credit utilization, recent credit applications, and public records of bankruptcies, liens, or court judgments.

Why Does Your Credit Score Matter?

Having a good credit score is essential for many loans and personal finance solutions. But why does it matter what your score is? What does a credit score tell lenders about you?

The main reason lenders look at your credit score is for risk assessment. If you have a history of paying your bills on time and not defaulting on loans, then you’re more likely to continue this trend. If you’ve often missed monthly payments or have defaulted, then it’s likely you will do so again.

Your credit score is a numerical indication of how much of a risk you are to lenders, which is why it has such an impact on your ability to get approved for a loan.

How to Improve Your Credit Score?

So, if your credit score is so important, are there ways to improve it? 

Below, we’ve summarized the top ways to improve your credit score. These are tried and tested methods that we have seen people use to allow them to get approved for auto financing. Take a look now to learn more.


To begin with, you’re going to need to make a concerted effort to pay all your bills, direct debits, credit cards, and loan repayments on time. This means ensuring the money is in your bank account so the payment doesn’t bounce.

You can keep track of your monthly payments in a spreadsheet or notebook to ensure that the money is there when it needs to be. Even if you’re only paying the minimum amount each month, make sure it’s going into your bank on time.

If you think you’re going to miss a payment by one month, contact the lender as soon as possible to work out a solution before the payment is due.


If you have a credit account, then you need to make sure you don’t exceed the pre-approved limit. Going over your credit limit can impact your credit score. Going over the limit also means having more to pay back than you may be able to afford.

It should also be noted that while having a credit card and making monthly payments on time can improve your credit score, lenders may see you as a risk if you use large amounts of your available credit consistently.

A good rule of thumb is to use less than 35% of your available credit. Staying within this limit will show lenders you’re not reckless with your credit.

Credit Checks

When applying for a car loan, it’s easy to get carried away and apply to lots of different places. However, every time you check your credit, it appears on your credit report. 

While people get their credit checked every day for one reason or another, if a lender sees repeated checks on your report, they may assume you’re desperately seeking credit. Unfortunately, this won’t reflect well on you.

Repeated checks imply you’re living beyond your means and looking for a way to continue to do so.

So, even if you’re trying to get approved for a car loan, take it slowly and only apply when you’re ready. Limit the number of times you apply for credit or get all quotes within a two-week time frame so that the inquiries into your credit show up as a single inquiry rather than multiple.

Credit Types

It is best to use different types of credit to improve your credit score. If you’re only using credit cards, it can hurt your score. Instead, try to use different types, like loans, lines of credit, and credit cards.

Importantly, you need to pay these back on time to ensure your credit score isn’t affected by late payments.

What To Do If You Have a Bad Credit Score When Applying for a Car Loan?

Sometimes, you need a car before you can improve your credit score. So, what can you do if you need to apply for a car loan with a bad credit score?

In Canada, you can still get a car loan with a bad credit score from specialized lenders. These lenders offer what is known as a bad credit car loan. And, as it sounds, this means you will get approved for a car loan despite poor credit.

Bad credit car loans are helpful because they give people access to a car when they need it. They also help people with poor credit to improve their credit scores with monthly payments.

Specialized lenders who offer this kind of loan will still need proof that you have a stable income, and a loan of this type may have slightly higher interest rates than a traditional loan. However, it is a useful option for people who need a car loan quickly.

When preparing to apply for a bad credit car loan, ensure you know how much you need for the car you want. You also need to factor interest rates, insurance costs, car maintenance, and unexpected repairs into the budget.

While bad credit has made this kind of loan a necessity, you can see it as an opportunity to improve your credit score and get approved for more traditional loans in the future. 

Final Thoughts

Your credit score can have a huge impact on the financial solutions you can utilize. You can improve it over time by making sure you meet monthly payments, using different kinds of credit, and not using more credit than is necessary.

If you have poor credit but still need a car loan, there are options out there. Lenders, like Car Loan Masters, can offer bad credit car loans to help you get the car you need while improving your credit score.

Get in contact with our helpful team now to find out more about our car loans and how we can support you, even if you have poor credit.