Credit Repair Tips and Tricks
How credit repair companies work and what you can do to improve your credit on your own.
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- 1 Credit Repair Tips and Tricks
- 2 How To Get Your Free Credit Report
- 2.1 Should I monitor my credit?
- 2.2 How to Fix Errors on Your Credit Report And What Are The Steps To Fix Them?
- 2.3 Debt Settlement Resources & Articles
- 2.4 Debt Recovery Services: How to Deal with Them & Stop Debt Collectors
- 2.5 Credit Counselling: Is It the Right Choice for You?
- 2.6 Dealing with CRA and Tax Debt Problems
Your credit report contains important information. It lists details on every loan you have taken out in the last six years, including how often you make payments, how much you owe, the limits on each account, and much more.
Lenders look at your credit report to help them determine the risk of lending to you. If you have poor credit, you may have difficulty getting new loans and you will likely be charged a higher interest rate on the loans that you are able to get. This means that your credit rating is very important, and it also means that credit repair is important for those who are having financial problems.
When it comes to credit repair, a lot of people feel overwhelmed, and that’s understandable. The credit bureaus make it very difficult to figure out what sort of information goes into a credit report and how credit scores are calculated. Making the process even tougher is that there are a lot of services out there that unfortunately make false promises about what they can do in terms of credit repair. It’s important to understand that there are a lot of credit repair myths and false information that exist and the only way to avoid this information is to discover the truth.
Here are some details that explain what you can do to repair your credit and some credit repair tips that may help you.
How to Repair Your Credit
It’s important to note that the only way to accomplish credit repair quickly is if there is an error in your credit report and you have it corrected. Errors certainly exist in credit reports. Sometimes debts that have been paid off are not listed as paid, sometimes numbers are entered incorrectly, and there have even been situations where another person’s information has been recorded in someone else’s credit report. Obviously, these are all serious problems.
The first credit repair step you’ll want to take is to get a copy of your credit report. The major credit bureaus in Canada (TransUnion and Equifax) prepare these reports and each will mail you a copy of your credit report for free on your request. If you would like an electronic copy, however, you will have to pay.
You will also have to pay to find out your credit score, which is a three-digit number that is generated based on the information in your report.
Once you have your credit report, look at it carefully. If you spot any errors, contact the bureau to have them corrected. Fixing errors will make credit repair much easier since once these errors are corrected, your credit rating will likely improve.
However, if you don’t have any errors in your credit report but you do have poor credit, you won’t be able to fix it overnight. While you can damage your credit score quite quickly, credit repair takes time.
For credit repair to be successful, it’s important to consider what factors determine good credit as opposed to bad credit. Factors that affect a person’s credit include:
- Your payment history
- Lenders want to see that you have a long history of paying your bills on time
- How much you have borrowed
- In general, lenders do not want people to be “maxed out” or to be using the majority of the credit they have available
- If you are using a large percentage of your available credit, lenders may think that you are struggling financially or that you are close to borrowing more than you can afford to repay
- In general, creditors want to see that you are using around 30% of your available credit. Therefore, if you have $10,000 of credit available, you should try not to use more than around $3,000
- The length of your credit history
- If you have had a credit account for a long time, this is considered a positive sign
- How often you apply for new credit
- Every time you apply for new credit, this is noted on your credit report. If you have applied for a lot of new credit in a short period, lenders may feel like you’re having trouble making ends meet
Once you understand the factors that go into your credit report, the credit repair process can begin. To rebuild your credit, you will need to show good credit habits. This means that you will want to borrow a reasonable amount, pay it back on time, and not use too much credit. Over time, this will help boost your credit score.
Should You Use a Credit Repair Company?
Credit repair takes time. Since your credit history is an important aspect of your credit score, you’ll need to follow good credit habits for quite a while if you want to improve your credit. Depending on your current credit situation, it could take months to rebuild your credit or it could even take years.
This leads to many people looking to credit repair companies for help. However, as mentioned, there is no way to instantly improve your credit unless there is an error in your record. If there is an error, fixing it is something you can do on your own. A credit repair company can do it for you for a fee, but they won’t be doing anything different than what you would do on your own.
To repair errors, you’ll need proof to support your claims. For instance, if your credit report shows that you have outstanding debt, but you paid this debt in full, you will need to contact the credit bureau and provide proof that you paid the debt.
Some credit repair companies will state that they have extensive experience in communicating with the credit bureaus (which they certainly may have), and that this will speed up the process. This may be true, but it will also cost you a fee to have them do something that you could technically do on your own. It’s up to you to decide if this fee is worth it.
However, no one – not even a credit repair company – can remove accurate information from your credit report. If you have missed payments, made payments late, defaulted on loans, filed for bankruptcy, or done any similar activities to hurt your credit score, there is no way to remove these items from your report. If any credit repair company claims that they can quickly and easily eliminate truthful items from your credit report, they are being dishonest.
Another strategy that credit repair companies often use is secured credit cards to repair credit. A secured credit card is a card that is backed by a deposit. If you have poor credit, a good way to improve your credit is to borrow a reasonable amount and pay it back on time. Over time, this will improve your credit score. However, if you have poor credit, it can also be difficult for you to get a loan or a credit card, which means you won’t be able to show that you can use credit responsibly. Secured credit cards are designed for these situations.
To get a secured credit card, you’ll need to put down a deposit. You are then given a card that you can use like any other credit card. Over time, making purchases on this card and paying your bills before they’re due will improve your credit. Note that a secured credit card is different from a prepaid card. Prepaid cards work like gift cards and they do not help with credit repair.
You can likely get a secured credit card even if you have poor credit and you do not need to use a credit repair company to get such a card.
Credit Repair And Dealing with Debt
One aspect of credit repair that is sometimes overlooked is that having a large amount of debt makes fixing your credit quite difficult. Not only does carrying a lot of debt hurt your credit score in itself, but it’s also very tough to manage your finances when you owe a large amount in debt. Creditors are very reluctant to lend to people who have high debt loads for this reason.
Therefore, if you’re looking at credit repair, it’s a good idea to also look at ways to reduce your debt. By reducing your debt, you’ll use less of your available credit (which will boost your credit score) and you’ll free up money that you can use to afford your monthly expenses, which will mean you won’t have to borrow more money to make ends meet.
Talking to a Licensed Insolvency Trustee can be a good idea if you’re having difficulty paying your debts. Most trustees offer free consultations where they will review your finances and provide you with details on the debt relief options that are available to you.
Some debt solutions, such as bankruptcy or consumer proposal, will have a negative affect on your credit rating. These processes will be noted on your report, which can make it more difficult for you to get future loans. However, this process will also help you solve your debt problems, which may mean it’s still the right decision to proceed with one of them if you have a lot of debt. Speaking with a trustee about debt and credit relief can help you make the right choice for your financial future.
How To Get Your Free Credit Report
There are plenty of places from where you can get your free credit check and report, however, just a few of them can provide as much accurate information closer to the “real” credit score. Do not trust any website that comes up with the title “Free Credit Score Report” online.
Just to remember that having a soft credit check will not affect his / her credit score.
Different companies called credit check differently. They have a similar meaning, however as an example:
- TransUnion Canada called credit report: “consumer disclosure”
- Equifax Canada using the terminology: “credit file disclosure”
- Experian: “Credit Report & FICO® Score”
Order by telephone:
Call the credit bureau and follow the instructions
Tel: 1-800-663-9980 (except Quebec)
Tel: 1-877-713-3393 (Quebec residents)
All these agencies must be licensed and approved by the Government of Canada.
Tips: If for some reason, you need an accurate credit report, we advise you to contact more than one credit report agencies. Not because one is better than the other one, it’s just one could provide additional information vs other credit agency.
Should I monitor my credit?
If you are planning to apply for a large amount of loan, for example, a car, or even a home, you want to have the best credit score you can get. So many times this effort it is overlooked by the clients and ones they show up at the bank they get disapproved or the rates will be too high, so the banks can cover themselves.
One great idea is to look to monitor your credit trough Canada’s credit bureaus and also by other private agencies. Ones you subscribe to their service when the credit score is changing you will get notified. One example of a notification is when an institution it is checking your credit score.
How to Fix Errors on Your Credit Report And What Are The Steps To Fix Them?
Now, after you receive your credit report, and you discover that some of the personal information is not correct, you may be affected by an identity thief and they stole your information.
The Canadian Anti-Fraud Centre collects information on fraud and identity theft. If you think you are a victim please contact them here
To avoid any further incidences and to begin the process of clearing any harm done, you should:
- Keep a log of all your phone calls (write down the name of anyone you talked to, what he or she told you and the date your conversation occurred)
- Follow up in writing with contacts you’ve made on the telephone or in-person to make sure you have a record of all agreements
- Make copies and keep all originals of supporting documentation, like police reports and letters to and from companies
- Keep old files even if you believe the case has been resolved, in case of errors reappear on your credit reports or if old issues arise
Many thieves are targeting busy places, like shopping malls where most of the crowd exists. When shopping, it is very important to remember:
- never give or talk to anyone about your PIN card number
- no one is watching behind your shoulder when you enter your PIN at the banking machine
- don’t take all the cards with you. You don’t need all of them, just use the ones they use the most.
- don’t go the small cash vendor machine where are isolated or not properly illuminated.
- avoid giving too much personal information when cashier usually asks for marketing purposes. Other people are listening too.
Having all these in your mind you should be fine, but as always for any issues, contact the proper authorities and don’t try to resolve by yourself the issues. It could be very dangerous.
Debt Settlement Resources & Articles
How to deal with debt recovery services, what debt collectors can do, and how you can stop these collection agencies from calling.
If you’re struggling with debt, you might be wondering if credit counselling is right for you. Here is some information that can help you make this decision.
Find out what actions the CRA can take if you owe tax debt and how you can put a stop to wage garnishment, frozen bank accounts, and more.
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