Is it possible to fix bad credit?
Yes. A bad credit report is never good, and it can prevent you from getting loans. Luckily there are things you can do to repair the damage. To help you with credit repair, below we have provided a list of steps you can take to improve your credit rating.
How long do bad credit marks stay on my report?
Except for in rare cases, bad marks will stay on your credit report for up to seven years.
If I can’t wait seven years, what should I do?
Start by getting a copy of your credit report. It is possible to repair your credit on your own, but you need to know where the problem areas are before you can do this.
What if the only negative thing on my report is some money on an old credit card?
If you only have $100 dollars or so on an old credit card, simply save up that amount of money, contact the credit card company, and make the payment. Paying off your debts is the quickest way to get your credit back on track.
What if I can’t manage to make the payments?
In this case you may have to consider a debt management plan, a consumer proposal to the people you owe or, if all else fails, filing for personal bankruptcy (although bankruptcy really should be your last resort, only if you are certain that no other option can work for you).
If I file for bankruptcy, how do I start rebuilding credit again?
A good way to start working on credit repair after filing for bankruptcy is by borrowing fully secured money. Secured loans are the ones you obtain that are backed up by an asset or guarantee, like a car loan for example. If you don’t pay, your creditor will sell the “security”.
What if I don’t want to borrow secured money?
You could also consider finding a co-signor. With this option, the credit will be given to the co-signor not to you. This way, if you pay the loan, your record will improve. But if you don’t, your co-signor will pay the price.
What else can I do?
Getting a secured credit card will contribute to your credit repair. Put a certain amount of money on a deposit with a bank, and pledge the money as security for the card. If you are unable to make the payments, the bank will just take money out of your deposit and reduce your available credit.
I’ve heard people with RRSPs get treated differently by banks. Is this true?
Yes. Banks see people with RRSPs as responsible people, since they are obviously thinking about the future. For this reason, it is strongly advised that you borrow for one. When you get a tax refund, use the refund to repay the loan. This way, you will be paying off the loan much faster than is necessary.
Should I have credit even if I don’t need it?
Yes. You should get a small line of credit and use it to pay off bills. Then, pay off the line right away. After you repeat this step several times, your credit report will be noticeably improved.
What is the most important thing to remember?
The best advice we can give in regards to credit repair is to pay your bills on time, and not let any cheques bounce. The credit system wants to know that you can handle your finances, and that when you borrow money, it is not because you have no other option, but because you want to.