Credit Repair: What Can I Do about It?

Having a negative credit report can put a lot of strain on many aspects of your life. In most cases, you will be unable to get a loan, or even rent an apartment. You can change this: start working on credit repair. Below we provide some ideas on what you can do to improve your credit rating.

First, you need to know that although a poor credit report is not impossible to fix, it will take some patience. Without you putting any effort to repair your credit history, bad marks will stay on your credit report for up to seven years, except for in very rare circumstances.

If you feel that you cannot wait out the seven year period, there are several things you can do to speed up the process.

Your first step is to get a copy of your credit report. You’ll want to know what exactly is causing the problems before you begin to solve them.

Next, pay your bills. If the only negative mark on your credit report is a small amount on an old credit card, try saving up the money, contacting the card company, and making the payment. Paying off debts is the fastest way to repair your credit.

If you find that you are unable to make the payments, you may need to consider some other options. Popular alternatives include a proposal to your creditors, a debt management plan, or possibly even personal bankruptcy. Bankruptcy should always be considered the last resort.

Once your debts have been taken care of, it’s time to start repairing your credit.

One way of doing this is to borrow fully secured money. Secured loans are the ones you acquire that are backed up by an asset or guarantee (a mortgage for example).

Another option is finding a co-signor. With co-signors, the loan is granted over to them, not you. This way, if you pay the loan your record will improve, but if you don’t, your co-signor will be required to pay it off.

You could also get a secured credit card, meaning you can put a certain amount of money on the deposit with a bank, and declare the money as security for the card. If you’re unable to make necessary payments, the bank can just withdraw money from your deposit, and adjust your credit amount accordingly.

In addition, you could borrow money for an RRSP. We strongly recommend this as banks tend to view people with RRSPs as responsible. When you get a tax refund, you can use the refund to repay the loan. That way, you will be paying off the loan faster than required, and this will substantially improve your credit report.

Finally, borrow money even if you don’t need to. It’s a good idea to acquire a small line of credit, solely to pay off your bills. Then, pay off the line of credit immediately after paying the bill. Once you do this several times, your credit report will show marked improvement.

The most efficient way to repair credit and improve your credit report is to pay your bills on time, do not bounce any cheques, and do not overdraw your account at the bank. Remember, you want to show the credit system that you are responsible with your finances.