Here's how to improve or build your credit score if you have none

TORONTO -

Your credit score is one of the most important qualifiers you have, signaling to financial institutions the likelihood of you repaying borrowed money.

Canadian credit scores range between 300 and 900 and if you’ve been late paying your bills, you could have a low credit score. Some people with no credit history could actually have no score at all.

The good news is that if you don’t have a credit history or you have a low credit score due to past financial problems, you can work to make it better.

If you’ve been thinking of buying a home, a car or taking out a loan and your credit score is below 600, it can be hard to qualify with many lenders.

“A bad credit history can also make it difficult to rent an apartment, go to college or even get a job,” Lisa Gill of Consumer Reports told CTV News Toronto on Wednesday.

Part of the problem is that if you want to build up your credit, you need to get credit. So, how can you get credit if you have bad credit?

An important first step is to open a bank account, take out several small loans and pay them back, making on-time monthly payments.

Over time, this should improve your score.

Next, you might want to consider applying for what's known as a secured credit card, which means that you've backed the card with cash. Secured credit cards can help build or rebuild your credit score since the payments are included in your credit report.

You could also ask a family member with good credit to add you to their credit card account, but just make sure you have a good relationship with that person because if you miss or are late with a payment, it can hurt both your scores.

Once you establish a credit score you'll want to continually try to improve it. To do that you should try to pay off all outstanding collections, fix any errors you find in your credit history and try to reduce balances on your credit cards.

If you always pay your bills on time, you can avoid collections in the future.

“Once you pay off any debt in collections, many credit-scoring systems won’t heavily weigh them when your score is calculated,” Gill said.

If there is an error on your credit file you can dispute it by sending a certified letter with evidence to Equifax and TransUnion.

Equifax also now allows you to check your credit score for free and you can access your file in just a few steps on their website.

Also, watch out for any company that promises it can fix your credit score fast for a fee. You don't have to pay to improve your score — it can only be done over time by having good financial habits and sticking to them.