How to Repair Credit in Canada

Having a poor credit history can be a source of stress and shame for many. It can also prevent you from living the lifestyle you want. Repairing your credit isn't impossible and there are many things you can begin doing immediately to help relieve that stress.

Instructions

1

Obtain a credit report. Every Canadian is entitled to one free credit report per year. Your free credit report can be obtained (via Canada Post) from Equifax Canada and TransUnion Canada. Keep in mind that the free reports do not give your credit score. They simply provide you with an overview of your credit history. If you are interested in receiving your credit score and a more in-depth analysis of how lenders will view you as a borrower, you have the option to pay for an online credit report.

2

Report any errors. Errors sometimes appear on consumer credit reports. It is important to review your credit report and verify that all information is accurate. Your credit report includes an area to report discrepancies or dispute inaccurate information. If you have obtained your free credit report through the mail, you must fill out your report/dispute and then return it via postal mail.

3

Establish a plan. Develop a spending plan as well as a credit repair plan. This should include paying any outstanding/missed payments. This plan might also include visiting a credit counselor who may offer advice for your specific situation. Your plan also may include destroying your existing credit cards to prevent you from slipping further into debt. It is important to stop yourself from accruing more debt while repairing your credit.

4

Pay everything on time. Something as simple as a few late cell phone or cable bill payments can have a negative impact on your credit score and prevent you from being approved for new credit. Pay all bills at least five days prior to the posted payment date to allow for processing times. You may find it easier to set up automatic payment programs through your bank. Ask your bank how to set up automatic bill payments.

5

Carry a zero balance or low balance on all credit cards. The higher balance you carry on your card(s) the more it impacts your credit score. One of the quickest ways to improve your credit score is to lower your existing credit balances. If possible, pay all credit cards off in their full balance each month. This will help you avoid interest charges and it will also help you develop the habit of paying your debts immediately.

6

Avoid new credit. Stay away from new credit until you have paid off all or a large portion of your existing debt. This is to avoid high interest rates for high risk borrowers as well as it allows you to focus on paying debts and establishing appropriate spending habits. Keep in mind that applying for new credit can have a negative effect on your credit. Being declined new credit can also have a negative effect on your credit history so it is best to avoid new credit until you are able to be approved.

7

Re-establish yourself. After you have begun paying some of your debts off and limiting your spending, you may want to apply for new credit. If your credit history is considered high-risk, you may be declined new credit or have secured-credit options. Secured credit usually involves paying a deposit or prepaying the amount (or a percentage) on your new card. As a high-risk borrower you may find that you are charged a high interest rate and/or the credit limit you are approved for is quite low. Don't let this cause stress. Most companies will increase this limit as you prove your ability to successfully manage your credit.

8

Continue to monitor your progress. Once you have developed a conscious attitude on repairing and monitoring your credit, continue managing it responsibly. It is a good practice to obtain a copy of your credit report at least once a year to continue improving your credit.