With more Canadians hitting record levels when it comes to household debt, there’s probably no better time than now to tackle the topic of credit and how you can improve yours.

Credit scores are determined by a complex formula that looks at your income, your debt repayment history, your total approved credit limits, your credit usage levels. The information is crunched into a scoring system that assigns a number of between 300 and 900. This is known as your FICO score. The higher you are on the scale, the less risky you are to a lender. Generally, 680 and higher is good.

Mortgage and credit experts recommend getting a sneak peek at your credit rating yearly or every two years. The main reasons for this are to ensure that the information the credit bureau has is accurate and to make sure you’re not the victim of fraud. Credit rating agencies such as Equifax Canada and TransUnion Canada are typically used to determine scores.

Here’s how you can improve your credit score if you’ve been a little negligent paying your credit cards on time:

1. Pay your bills by their due date, even if it’s the minimum amount. Try setting up automatic payments so you don’t miss a date.
2. Keep your spending well below your credit limit. Even if you pay off your balance every month, maxing out your credit looks bad. Get your limit raised if you’re spending is too high.
3. Make sure you use your credit. An active history is what lenders look for so pull out your plastic every so often.
4. Don’t carry tons of credit cards. Most card holders are unaware that your credit is negatively affected every time a company checks your credit rating in order to issue you new credit.
5. Be wary of having too many credit lines. A number of loans may worry some lenders that you’re desperately seeking credit everywhere and that you won’t be able to pay the debt off.
6. People with exceptionally poor credit need to re-establish their credit by getting a secured credit card. These cards are similar to gift cards as you pay the credit company upfront and then make purchases on it until the balance depletes.

There are a number of online resources that assist Canadians with resolving their financial challenges, better managing their cash flow and improving their credit rating. Try BDO’s online quiz to determine your financial health.

1. Are you financially stable? Have you been working in the same industry for one year? Have you been self-employed for more than two years? Do you have some savings for your down payment
2. Ready to shoulder the costs of home ownership? Remember that in addition to mortgage payments there are repairs, maintenance and unexpected costs. Do you have the time and money to devote to home maintenance? What if your furnace dies? How much is a typical water and sewer bill? What do you mean, there’s dry rot in the attic?
3. How much is too much? Add your debt payments to your household expenses. The Canadian Mortgage and Housing Corporation (CMHC) recommend your monthly housing costs should not exceed 32 per cent of your gross income.
4. Your credit rating. Before getting a mortgage, lenders will want to see how well you’ve paid past debts and bills. If you have no credit rating, start building one. Apply for a credit card with a good interest rate, make small purchases and pay the bill in full when it comes in.
5. Get pre-approved for a mortgage.
6. Understand your terms. It’s a good idea to research mortgage terminology prior to meeting with a mortgage specialist so you understand commonly used words and phrases such as variable rates and amortization. Ask friends or family for help or go online.
7. Find a realtor. Ask trusted friends or family members. The other option is to select a realtor who specializes in a certain area or type of real estate such as first-time home buyers or condos. If that’s not doable, take notice of the for sale signs in the neighbourhood you want to live. Whose name continues to pop up again and again?
8. Figure out where you want to live. Do you want to be near Go Transit, highways, schools or are you looking to live near restaurants and nightlife?
9. What kind of a house are you looking for? Know the difference between a stacked townhouse, a semi-detached house and a duplex. Bone up on the language of buying.
10. Speak to a lawyer. Know your closing costs. Get a quote from two or three lawyers on what fee they charge and what they bill for disbursements. Closing costs can also include land transfer tax, mortgage insurance and a home inspection. Budget 3 to 4 per cent of the purchase price for closing costs.

You’ve likely seen a sign that advertises exclusive real estate offerings in your neighbourhood and wondered how is that type of sale different than any regular old listing?

An exclusive listing means a seller is giving the agent and their brokerage firm exclusive or special access to find a buyer for their home. With this type of arrangement only the listing agent or agents with the brokerage firm can present offers on your home because only the listing agent is entitled to the commission.

When you sign such an agreement with the listing realtor, it usually outlines a time frame in which the realtor has to sell your home. Once the time has passed, the seller can list their home on the Multiple Listings Service (MLS), which is the real estate listing service that is open to all real estate agents.

So why would a seller want an exclusive listing if it sets limits on the number of people who would potentially see your home? Isn’t the point of a sale to advertise the offering far and wide with the hope of generating a high level of interest, which in turn drives up the price of the home?

That depends. While listing your home on the MLS increases the number of eyeballs who will see your home, the point of an exclusive listing for many is staging a more private sale. For a multitude of reasons – divorce, job loss or perhaps sellers who are high profile members of the community – some sellers don’t want it widely broadcasted that they are planning to make a move.

It’s also believed that exclusive listings can elicit better quality offers as often realtors who contract exclusive listings do so because they have select buyers in mind.

Finally, in some cases, commissions on these types of sales are sometimes lower as the real estate professional does not have to pay the MLS fees. This can bode well for both the seller and buyer.