Repairing your Credit Report
A credit report is a detailed report of your credit history. In Canada, credit reports are kept by the major credit bureaus (TransUnion and Equifax). A lot of information is contained in your credit report. For example, your credit report contains information on every loan that you’ve taken out in the last six years. It lists details such as how much you owe, how often you pay on time, your credit limit for each account that you have and other important information.
Many lenders use credit reports to determine whether or not they will lend you money and to help them determine the interest rate that you will pay on your loan. Therefore, having a good credit history is important if you would like to borrow money. Those with good credit histories (and, therefore, good credit reports) are more likely to be approved for loans and will likely receive lower interest rates.
If you have a poor credit history, this will be reflected on your credit report. However, your credit report represents your current situation. This means that it’s possible to rebuild credit and improve your credit report over time.
Tips to Rebuild Credit
If you want to improve your credit report and rebuild credit, here are a few tips.
Make payments on time
How often you pay your bills on time matters a lot when it comes to your credit rating. If you’re trying to improve and rebuild credit, it’s important that you make payments when they are due. If you can’t make the full payment when it’s due, at least pay the minimum. Paying the minimum isn’t ideal, but it’s better than missing a payment or paying late.
Get a secured credit card
If you have a poor credit history, you may find it difficult to get loans. However, a secured credit card is secured by a deposit. This deposit is usually equivalent to the credit limit on the card. For example, if you put down a $500 deposit, you’ll have a card with a $500 limit. You can then use this card like any other credit card to make purchases. Paying the bills on time on this card can help you rebuild credit.
Note that a secured credit card is different from a prepaid credit card. A prepaid card works like a gift card. You put a certain amount on the card and, once that amount is used up, the card is empty. There are no monthly bills to pay and, therefore, this type of card does not build your credit history or help you rebuild credit.
Keep in mind that there is no “quick fix” to repair or rebuild credit. Some companies claim that they can go into your credit report and make changes for a fee. This is not true. They cannot improve your credit rating. All they can do is fix errors, and you can do this yourself for free. In fact, it’s important that you check your credit report for errors and correct any that may exist.
Checking your Credit Report
While most Canadians have a credit report, many people do not know what is in their credit report. This is a mistake. You should check your credit report periodically in order to check for errors and so that you know what is going on with your credit. It is a common misconception that it costs money to check your own credit or that doing so will damage your credit history. This is not true.
You can check your credit report for free by requesting it from the major credit bureaus. They will mail you a copy of your report. If you wish to get an electronic copy emailed to you instantly, there is a charge for this service. There is also a charge to get your credit score. You credit score is a number that is calculated by the credit bureaus from the information in your credit report. While many lenders use this number to determine whether or not they will give you a loan, the information in your credit report that you can obtain for free should be enough for most people to get an idea on the health of their credit. When you receive your credit report, check it for errors and, if you spot any, report them to the credit reporting agency that prepared the report.
If you check your credit and it shows that you have a poor credit history, don’t despair. With some effort and by following good credit habits, you can rebuild credit and improve your credit history.