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Real Fixes for Increasing Your Credit Score

by:
Gursh Singh

There’s been a lot of talk around “credit repair” lately. A few companies have even popped up claiming they can increase your credit score immediately or “repair” your credit with just a few simple tricks. Everyone wants a quick fix to rebuilding their credit but the truth is there are no shortcuts, and anyone who tells you otherwise is either misinformed or not looking out for your best interests.

In this blog you will learn:

  • 5 tips when looking for credit repair help
  • 10 tips to help you start rebuilding your credit

The truth about improving your credit

You can’t erase the past but you can rebuild your future (and your credit history) by taking the right steps, and sometimes those steps are better taken with the help of a qualified professional, like Credit Canada Debt Solutions. One of our credit counsellors can look at your entire financial picture, including any debts you owe, and tell you exactly how you can go about rebuilding your credit—because it’s not about repairing, it’s about rebuilding.

But first, let’s get the facts straight:

  1. "Credit repair” clinics or companies often claim they can remove negative information from your credit report. Beware—these claims can be false, and in some cases, illegal.
     
  2. A consolidation loan will not automatically improve your credit rating or increase your credit score. In fact, it can make it worse if you default on your loan payments. It doesn’t make sense to take on more debt to fix your credit if what got you in trouble in the first place was taking on too much debt.
     
  3. You can order a free credit report from Equifax or TransUnion once a year, but you will have to pay a fee to obtain your credit score.
     
  4. Your credit report contains the following information:
  • Personal identification, possibly including employment information.
  • A record of organizations that have recently asked for your credit report.
  • Your payment history for accounts reported to credit bureaus.
  • Any information on public record, such as collections, judgments, bankruptcies, and paid tax liens.
  1. Accounts reported to credit bureaus typically contain the following information:
  • Payment status (on time or as agreed, late and how late, or bad debt)
  • Balance on the account
  • Required payment amount
  • Credit limit and how much is being used

Rebuilding your credit

Rebuilding your credit and increasing your credit score is going to take some time, but it can be done. Here are a few tips on how:

  1. Pay all your bills on time! That includes rent, mortgage payments, utilities, credit cards, and taxes.
     
  2. Review your credit report at least once a year. If it contains incorrect information contact Equifax or TransUnion directly and notify them immediately. Incorrect information on your credit report could be an indication of identity theft or fraud.
     
  3. If you have missed payments, get current and stay current. Even making minimum payments is better than no payments. If you want a good credit score you must make regular payments on time!
     
  4. If you have accounts that are in collections but you can start making payments towards these accounts, make sure you contact your original creditor(s) and ask them to pull your file back from any collection agencies contacting you due to outstanding payments. Also, make sure you get written proof from your creditor(s) of any payments you make.
     
  5. Don’t bounce cheques! Your bank can report this information to credit bureaus.
     
  6. Pay off debt rather than shift it to other accounts.
     
  7. Don’t apply for too much new credit in a short amount of time. Only apply for new credit and open new accounts as needed. Adding new accounts will lower your average account age, which could have a negative impact on your credit score, especially if you are a new credit user. Plus, opening too many new accounts at once could be flagged as an indication that you are experiencing financial difficulties.
     
  8. Apply for a secured credit card. A secured credit card is a credit card you make a deposit on, with your own money, before you start using it. This deposit is kept in a separate account in case you default on your secured credit card’s monthly payments. The limit on a secured credit card is usually a percentage equal to or higher than your original deposit.
     
  9. A secured credit card is different from a prepaid or reloadable card. Prepaid cards don’t help when it comes to improving your credit rating because essentially you’re not borrowing any money—you’re using your own—so you’re not making monthly payments. Prepaid or reloadable cards work more like debit cards: You make a deposit on the card and whenever you use it that amount automatically gets deducted from your card balance. When you’ve spent your entire deposit amount you simply reload the card.
     
  10. If you need help with your debt call Credit Canada at 1.800.267.2272 to book a free appointment with a certified credit counsellor, or complete our Free Debt Assessment online. A qualified credit counsellor can review any debts you owe, your monthly expenses, income, and your credit report (if you have it) and discuss different options available to you. Many of our clients have had unfavourable credit, but with the right tools and guidance, they’ve been able to improve their credit rating and personal finances.

Filing a complaint

We’ve heard from too many people who have been misled by companies claiming they can help repair their credit, when all they do is take their money and make things worse. The good news is the Competition Bureau investigates fraudulent or misleading advertising to protect consumers, so if you believe an organization has made false or illegal claims about increasing your credit score, or improving your credit rating and/or credit history, notify the Competition Bureau. It’s completely anonymous and you’ll be helping prevent other people from falling victim.

Tune in next week when we get a true insider and credit score expert to divulge their top credit score myths and facts. 

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Topics: Credit Building

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