If you have less than perfect credit, you may have been tempted by advertisements offering credit repair services. In newspapers, TV, radio, and on the Internet credit repair services claim to be able to remove bankruptcies, create new credit identities, and even erase bad credit. Some, though, may be scams, so before taking up any of those offers, please read Avoiding Scams.
In the Canada, negative information on your credit report is generally reported for six or seven years. Bankruptcy information can be reported for up to 12 years. Default information regarding Canadian insured or guaranteed student loans can be reported for seven years.
If your bad credit record is a result of inaccurate credit reporting, there is good news for you. While nobody can legally remove accurate and timely negative information from a credit report, the law does allow you to request a reinvestigation of information in your file that you dispute as inaccurate or incomplete. According to the Fair Credit Reporting Act, you can dispute mistakes or outdated items for free. You may ask the credit reporting agency for a dispute form, or submit your dispute in writing. You should include supporting documentation, clearly identifying each item in your report that you dispute, explain why you dispute the information, and request a reinvestigation. Make sure you remember to keep a copy of the dispute for your records. If the new investigation reveals an error, request that a corrected version of the report be sent to anyone who received your report within the past six months. If the reinvestigation does not resolve your dispute, ask the credit bureau to include your version of the dispute in future credit reports.
If your credit report is bad, but accurate, then start to think in terms of regaining your good credit reputation. This requires time, so do not be impatient. You need to regain trust with finance and credit card companies.
If you have recently had to pay off a lot of debt, you may be wondering what your next step should be. Maybe you have been through a divorce, and were left with a lot of high interest credit card debt; or maybe you got behind on your payments after being made redundant. Whatever the reason, you fell behind with your payments, your credit report suffered for it, but now you are keen to restore your credit reputation. Fortunately for you, it is a lot easier to re-build your credit than it was to get out of debt in the first place!
Here are the five tips that will have your credit report restored in good time:
1. Firstly, you should expect to spend about a year or more rebuilding your credit. If that seems like a long time, it is not. You must understand things from a lender’s point of view—they have to see proof that you are serious about keeping up a good credit record. The onus is on you. You are the one with a bad record, for whatever reason. You are therefore the one who must put it right.
2. To do this, you will need to establish some sort of credit, so that you can show your future creditors that you can be trusted. If you’ve had serious credit mistakes in your past, that may mean getting a secured credit card. These types of credit cards are secured by a bank balance, which will equal the spending limit on the card. The point of them is to build credit when no one else will issue you a card. They are a good way of showing that things are now on an even keel again, and you can maintain regular payments.
If you can apply for a low interest rate credit card, you should get one and use it for the sole purpose of rebuilding your credit.
3. Another credit report building method would be to make an application for a Bad Credit Car loan, and then pay it according to the suggestions I have outlined below.
4. The biggest single thing you can do to rebuild you credit is to make your payments on time. That means that you cannot be late, ever. If you are mailing in your payments, be sure to give it plenty of time to not only reach the destination, but also clear the processing channels. If you think that you’ve left too little time, send it on an assured overnight delivery. Nothing should stop you from getting those payments in on time! Remember, even one late payment can make a difference on your credit report so make your payments on time.
5. You should also aim to pay more than your minimum payments every month. That way you are showing creditors you are prepared to go that extra mile to repair your credit standing. Ideally, you would pay off your credit card every month, but if you can’t do that, then do pay more than the minimum. For example, if your minimum payment was $25 per month, try to pay at least $35. This will accomplish two things. First, it will make you look better in future lender’s eyes, and secondly, because by doing so, you will paying more toward your principle balance every month, (as opposed to interest), and that will reduce the overall amount that you’ll have to pay. The Best way to improve your beacon score with a secured credit card is to never take your total balance over half of the credit limit and pay the whole balance off every month.
Paying the extra may have a good psychological benefit to you too, as well as save you that horrendous monthly interest. It could be that, if you can pay more and more above the minimum, eventually you will be paying the balance off each month, and moving towards being a saver, someone who has more coming in each month than going out. That should be your aim long term, and the sooner you can start the better.
Do all of these things with patience and determination, and you’ll soon find yourself with a credit rating that you can be proud of!
About the Author:
Auto Source Financial is a Canadian Financial Firm that assists people with No credit or Bad Credit Obtain Vehicle Financing. We Specialize in New Immigrants and Foreign Student Vehicle Loans. www.autosourcefinanical.com