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Ask the Experts – March 2020

Many people don’t like talking about money. Some feel that it’s a private matter that should only be discussed among family and close friends, while others don’t discuss it because they are worried about making a mistake or saying something incorrect.

However, talking about money helps you understand it better. When you discuss budgets and finances, and when you ask questions about money, you learn things you wouldn’t have otherwise known. This helps you make smart decisions and improve your financial situation. That’s why, every month, our experts answer some of the money questions we receive.

If you have a question for our team, ask us online on FacebookTwitter or through our website.

The questions here have been condensed or rewritten for clarity and simplicity.

I have bad credit and it’s very hard to rent an apartment. How do I find out more about my credit score and fix my credit problems?

Dealing with bad credit can be a frustrating problem. As you mentioned, it can make it very tough to rent an apartment or get any sort of loan (such as a car loan). Unfortunately, there is no “quick fix” that will repair or improve your credit overnight. Any company that tells you they can “fix” your credit for a fee isn’t being honest.

The first step to improving your credit is finding out what’s in your credit report. The two major credit bureaus in Canada are TransUnion and Equifax. They each prepare and keep a credit report for every Canadian that has ever borrowed money. You can request to receive a free copy of your credit file by mail from both credit bureaus. If you want an instant online copy of your credit report, or if you want to know your credit score (a three-digit number that represents the information in your credit report), you will need to pay a fee.

Once you have your credit report, check it for errors. There could be mistakes in your report (such as typos or payments not being recorded) and this can negatively affect your report, so having these errors fixed is crucial. If you find anything wrong, write to the credit agency and point out the error. You will need to provide proof that a mistake was made (such as a credit card statement that lists the correct information).

If you have bad credit and want to improve it, the process takes time. Your credit history is a very important part of your credit report. If you have missed payments, borrowed more than you could afford to pay back, or defaulted on a loan, this will damage your credit score. To repair the damage, you’ll need to show that you can successfully borrow a reasonable amount of money and pay it back on time. And you will need to show that you can do this for a while to build up trust.

If bad credit is making it difficult for you to get a loan (such as a situation where you can’t get a credit card and show that you can responsibly make your payments, for instance) you may wish to get a secured credit card. A secured card is a credit card that is backed by a deposit. In most cases, the credit limit on the secured credit card will be equal to the deposit. This means if you put down a $500 deposit, you will get a secured credit card with a $500 limit. Many people who can’t get approved for a traditional credit card can get a secured credit card.

Once you have the card, you can use it just like any other credit card. If you make purchases and pay your bills on time, this will improve your credit rating over time. That’s because most secured credit cards typically report to the major credit bureaus. This is different from a prepaid credit card, which does not report to credit bureaus or help improve your credit rating. Prepaid cards don’t allow you to carry a credit balance and pay later, so they do not help you repair your credit.

Improving your credit score takes time, which can be frustrating. However, not only will you improve your score by following good credit habits, but you’ll also improve your financial knowledge as well. You’ll start to learn how to manage credit effectively and this will help you both now and in the future.