Opening a new credit account can affect your score in several ways:
- A hard inquiry is added to your report, which may lower your score slightly.
- Your average account age drops, which can impact your score.
- Your credit utilisation may increase, depending on how much of your new limit you use.
These effects are temporary. Responsible use, such as making payments on time and keeping balances low, can lead to long-term score improvement.
Keeping your credit in good shape can help show lenders that you can manage borrowing well.
Here are a few general tips that can make a difference:
Keep your credit usage moderate - It’s generally a good idea to use between 10% and 70% of your total credit limit at any one time. Using too much of your available credit can make you appear more reliant on borrowing.
Avoid opening too many new accounts at once - Applying for several credit products in a short period can temporarily lower your credit score.
Maintain a healthy mix of credit types - Having different forms of credit (like a credit card and an auto loan) can show you can manage a range of borrowing responsibly.
If your report contains errors, you can dispute them with TransUnion Canada.
Note: This information is for general guidance only and isn’t financial advice. Always consider your own circumstances or seek independent advice if you’re unsure about what’s right for you.