Avoid These 6 Spending Habits That Hurt Your Credit Score

Your credit score plays a fundamental role in your financial well-being. It can determine whether you qualify for a mortgage, car loan, or even a new cellphone plan. However, many Albertans unknowingly damage their credit through small but consistent spending habits.

At SCB Debt Solutions, we’ve seen how everyday decisions can quietly lower credit scores, but also how quickly things can improve once you understand the causes. In this article, we explore six common spending habits, with expert-backed advice on protecting your credit and overall financial health.

1. Overspending on Credit Cards

Credit cards can be a helpful financial tool when used responsibly. However, relying on them too often can affect your credit score negatively.

Why this can hurt your credit: One of the key factors in your credit rating is your credit utilization ratio, which measures how much of your available credit you are currently using. This ratio accounts for roughly 30 percent of your overall score. When you regularly use more than 30 percent of your available credit limit, lenders may view you as a higher risk, which can lower your score over time.

SCB Debt Solutions’ Recommendation: Try to keep your credit card balances below one-third of your total limit whenever possible. Making multiple payments throughout the month, setting spending alerts, or linking reminders to your budget can help you stay within a healthy range and demonstrate responsible credit management.

2. Making Only Minimum Payments

Paying only the minimum amount on your credit cards or loans each month can feel like a manageable way to stay on top of your bills.

Why this can negatively affect your credit: Making only minimum payments can lead to long-term debt and slow progress in improving your credit score over time. When you make just the minimum payment, most of your money goes toward interest rather than the principal balance. This keeps your overall debt level high and makes it more difficult to show positive repayment behaviour to lenders.

Our Tip: Whenever possible, try to pay more than the minimum amount required. Even modest additional payments can significantly reduce the interest you pay over time and demonstrate to creditors that you are actively working to manage your obligations responsibly.

If you find it difficult to keep up with payments or your balances are continuing to grow, SCB Debt Solutions can provide the professional guidance you need. Our Licensed Insolvency Trustee can help you explore options such as consumer proposals or debt consolidation. We can help you create a personalized repayment plan that fits your budget, while reducing financial stress and helping you move closer to a stronger credit profile.

3. Missing or Late Payments

Your payment history makes up about 35 percent of your credit score and is one of the strongest indicators of your financial reliability. Even a single missed payment can have a noticeable impact on your score, which is why staying consistent is so important.

Our Recommendation: Set up calendar reminders or automatic payments to ensure bills are paid on time each month. Consistency shows lenders that you are dependable, and over time, your credit score will reflect that positive behaviour.

4. Frequently Applying for New Credit

Each time you apply for a new credit product, such as a credit card, loan, or line of credit, a hard inquiry is recorded on your credit report.

Why this can negatively impact your credit score: A single inquiry has a minor effect, but several applications within a short period can make lenders view you as a higher-risk borrower and may cause a temporary drop in your score. Too many inquiries can also suggest that you are relying heavily on credit, which can affect future approvals.

Our Expert Recommendation: Apply for new credit only when it is truly necessary. Before submitting a full application, consider using pre-qualification tools or researching lenders that allow you to check potential offers without affecting your score. This approach helps keep your credit report clean while still allowing you to compare interest rates and rewards.

5. Carrying Balances Across Multiple Cards

Having several credit cards can be helpful, but carrying a balance on each one increases your total debt load and the chance of missed payments.

Our Tip: Focus on paying off one card at a time using the snowball (smallest balance first) or avalanche (highest interest first) method.

If you’re juggling several balances, SCB Debt Solutions can help you simplify your finances. Our team can assess whether a debt consolidation or consumer proposal would help combine your payments into one affordable monthly plan, so you can start reducing debt while protecting your credit rating.

6. Ignoring Your Credit Report

Many people overlook their credit reports, yet reviewing them regularly is one of the most effective ways to protect your financial health.

Why this can negatively affect your credit score: Errors, outdated information, or even signs of identity theft can quietly harm your credit score if they go unnoticed. Keeping an eye on your report allows you to spot issues early and take corrective action before they cause lasting damage.

Our Strategy: Request a free copy of your credit report from both Equifax and TransUnion at least once a year. Review it carefully for any mistakes, incorrect payment records, or unfamiliar accounts that could indicate fraud.

SCB Debt Solutions can help you understand your credit reports and develop practical steps to rebuild and maintain healthy credit. Identifying problems early and following a clear plan can help you restore accuracy, strengthen your score, and protect your financial future.

Rebuilding Your Credit with Confidence

Improving your credit isn’t about perfection; it’s about consistency and progress. Simple habits, like paying bills on time, lowering balances, and staying organized, can create lasting positive change. And if your debt ever feels overwhelming, remember that help is available.

At SCB Debt Solutions, we know that every financial journey is unique. Our Licensed Insolvency Trustee offers compassionate, judgment-free guidance to help you find the best path forward - whether that’s debt counselling, a consumer proposal, or bankruptcy solutions.

Small daily habits have a bigger impact on your credit than most people expect. By reducing balances, paying on time, and limiting new credit, you can steadily build a stronger credit profile. Take the first step toward lasting financial confidence today. Visit SCB Debt Solutions for a free, confidential consultation and let our experienced team help you rebuild your credit and regain control of your finances, one thoughtful step at a time.

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FAQs on Spending Habits to Improve Your Credit Score

1. How long do negative credit behaviours stay on my credit report?

Most negative items, such as late payments or accounts in collections, remain on your credit report for six years in Canada. However, their impact decreases over time, especially as you demonstrate consistent, positive repayment habits going forward.

2. Does closing old credit accounts help or hurt my score?

Closing an older account can sometimes lower your score by reducing your available credit and shortening your credit history. Before closing an account, consider whether it contributes to your credit utilization or helps maintain a longer credit profile.

3. How quickly can I improve my credit score after changing my bad spending habits?

While results vary, many people notice improvement within a few months of lowering balances and paying bills on time. Credit scores respond positively to consistent habits, so small changes maintained over time can lead to meaningful progress.

4. When should I seek professional help for debt or credit issues?

If you’re struggling to make payments, relying on credit to cover essentials, or seeing balances grow despite efforts to reduce them, it’s time to seek guidance. A Licensed Insolvency Trustee can assess your situation and explain realistic solutions.