Introduction
Rebuilding your credit in Canada takes time. After a bankruptcy, foreclosure or repossession, your credit score is at its lowest. It is difficult to get more credit and if you do, you are charged higher interest rates because lenders are worried about getting their money back. But there are methods to increase your credit score and rebuild your credit history. These are easy steps to follow, but they must be done consistently. Within a few months your credit score will show improvement.
Getting Credit Help
Meeting with a credit counselor is a good way to start rebuilding your credit. Nonprofit credit counselors are available who may be able to help you get lower interest rates on your loans and even reduce the amount you already owe. The counselors negotiate with the creditors on your behalf to make the debt repayment more manageable. There are no guarantees with this, but every bit helps when you have a huge debt to repay and you want to re-establish good credit.
When seeking help with your credit, try to avoid companies promising to fix your credit. While there are legitimate credit counselors available, there are also companies that charge huge fees to get foreclosures, bankruptcies and other adverse accounts removed from your credit files. These companies are scams. There is no legal way to remove such items unless they are actual mistakes. Foreclosures, repossessions and other negative items expire from your credit reports in several years.
Paying Your Bills
Pay each loan on time. Making payments on time is important when rebuilding your credit. This is especially vital when trying to rebuild your credit after adverse situations like a foreclosure. Late payments appear on your credit files and lower your score. Lenders want proof that you are becoming financially responsible by paying bills before or on the due date.
Also try to pay off all loans as quickly as you can. While this is easy to suggest, it is a goal you should always work towards. Reducing your debt helps to rebuild your credit. Try not to add any more debt until you have paid off what you already owe creditors. When paying a monthly credit card bill, try to pay a little more than the minimum amount required.
The Credit Reporting Agencies
The credit reporting agencies keep files about your credit history and determine your credit score. Get copies of your credit reports form TransUnion, Equifax and North Credit Bureau. An important step in rebuilding your credit is having negative items removed from your credit files. After getting free copies of all three credit reports, check that there are no errors that have lowered your credit score. Report all errors and the credit reporting agencies will look into the matter and make corrections to your credit files as necessary.
A Simple Way to Rebuild Credit
By getting a secured credit card you can start to rebuild your credit. If you currently have no credit cards, getting a secured credit card is very easy to do. With a secured card you deposit money into a connected bank account. Your credit limit is the amount of money that you deposit into this account. The money in the bank account is the collateral. If you don't pay the bills on the credit card the money in your account secures the credit card loan. Many banks offer secured credit cards and there is usually an annual fee, but as you re-establish credit, the annual fee is often waived.
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