Have you looked at your credit report and noticed a few flaws? Or have you recently gone bankrupt and need to rebuild your reputation as a borrower? Here are some tips for improving your credit rating.
First of all, it is very important to know that only time and your behavior can improve your reputation. The information in your credit file will stay there on average between 6 and 7 years. If you have a bad record, or a score less than 500 points, you will need to be patient and behave flawlessly.
Until the harmful information “disappears”, here are some strategies to restore your image:
Demonstrate income stability
Regular and stable income is reassuring for a lender. They indicate that you are less likely to find yourself penniless overnight, while offering material to seize in the event of non-payment …!
Pay your bills on time
You should not allow yourself any more delay, these being registered in your credit file. Now you have to prove that you have a budget, and that you are able to meet your obligations. Late payments show that you are badly organized or that your obligations are already too numerous. A new lender will not want to add an additional charge to your budget!
Apply for a $ 500 credit card with security deposit
Use your new card regularly, without exceeding 35% of the available amount (for example $ 175 for a limit of $ 500). By using only part of the available credit, you will demonstrate that you can manage your access to it. Also, be sure to repay the FULL balance on your card when due. This will prove that you are able to meet your payments.
Apply for a savings loan
An alternative to the credit card is a loan of $ 2,500 or $ 5,000 for a term deposit or savings, an RRSP, TFSA or any other savings or investment vehicle. Your savings will serve as collateral while you demonstrate your repayment capacity. As your loan is linked to a savings or investment product, you will also show that your debt is not linked to consumption. Finally, this strategy will allow you to build a cushion or an emergency fund.
Avoid at all costs offers from credit companies that offer you to improve your credit rating through one of their loan. First, all you are going to prove is that you can only borrow from other companies that cater to people at risk. Second, since your loan is not linked to any form of savings, your loans will be associated with a need to consume … on credit.
Avoid intermediaries who offer to help you improve your credit rating. You do not need to pay an individual to improve your file. You can get advice from an aid agency or your own financial institution. Second, if they offer you a loan, it will also be through a credit company, with the consequences noted above. Finally, some of these advisers will make you believe that they can withdraw information from your file. This is completely untrue. Again: only time and your good behavior can change the information there.