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Step by Step Credit Repair

Bad credit can be repaired and is never permanent.  Most credit can be repaired with time and a disciplined approach to repayment.  Following these steps will help you to repair your credit and understand how to maintain it.

1.  What is on your credit report?

The very first step in repairing your credit is to understand what is on your credit report.  You can obtain a free copy of your credit report once per year and can be obtained (via Canada Post) from one of Canada’s two credit reporting agencies - Equifax Canada or Trans Union Canada.  Free reports do not give you your credit score but they do provide you with an overview of your credit history.  For a more detailed and in depth view you will need to pay for an online credit report which is available through either one of the two credit reporting agencies websites.

2.  Review your report for any errors.

It is important to review your credit report and verify that all information is accurate.  Your credit report will include an area to report any errors or inaccurate information.

3.  Develop a plan.

A detailed plan should address issues around budgeting and credit repair.  Your plan should give consideration to the following;

a) Understand where you spend your money.

b) How can I reduce my expenses?

c) Can I increase my income? I.e. work overtime.

d) Bring all outstanding or missed payments up to date.

e) Destroy all but one major credit card.  This will limit where you can draw additional credit from as you pay them down.

f) Consider seeking the advice of a credit counsellor.

It is important to stop yourself from incurring more debt while repairing your credit.  Adhering to your plan will allow your debt to stop growing and return to a regular payment schedule.

4.  Don’t be late!

Late payments whether they are on utilities bills, cell phones or credit cards have a negative impact on your credit score.  Setting up your bills on an automatic payment plan will ensure your payments are made on the due dates.  If you are paying via mail allow extra time to ensure your payment is received prior to the due date.  Pay attention to your due dates.

5.  Stop using your credit cards.

The higher balances you carry on your cards the more it impacts your credit score, this is called credit utilization. One of the quickest ways to improve your credit score is to lower your existing credit balances..

6. Avoid new credit.

Stay away from new credit until you have paid off all or a large portion of your existing debt. Focus on paying debts and establishing a history of reliable and on time payments.  You may also consider destroying all but one or two major cards.  Retain cards where you have the longest payment history.

7.  Re-establish your credit.

Once you have paid your debt to manageable levels and maintained up to date repayment history, you may want to apply for new credit.  If your credit history is considered high-risk, you may be declined any new credit. Credit may be granted to you via a “secured credit option” This usually involves paying a deposit or prepaying the amount on your new card. As a high-risk borrower you may find that you are charged a high interest rate and/or the credit limit you are approved for is quite low.  Most companies will increase this limit as you prove your ability to successfully manage your credit.

8.  Maintain your “good credit habits”.

Once you have developed good habits and are managing your credit responsibly it will be much easier to use credit effectively.   It is a good practice to obtain a copy of your credit report at least once a year to continue monitoring and improving your credit.

 




 

 

Verico CML Canadian Mortgage Lender Inc.

o/a CML Canadian Mortgage Lender

2316 6 Street NE,

Calgary AB T2E 3Z1

Verico CML Canadian Mortgage Lender Inc.

o/a CML Canadian Mortgage Lender

Moose Jaw, SK

Saskatchewan Licence Number 315840

 

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