What is Credit Repair?
If you’re searching for how to repair credit, you already know the importance of a good credit report. Lenders look at your credit report and the credit score that is generated from this report to help them determine if they should extend new credit to you. If your report shows a lower credit score, you’ll be less likely to get loans (and any loans you do qualify for will most certainly be at a much higher interest rate).
Credit repair is the process of improving your credit score over time, so it becomes easier to obtain credit, whether that’s a new credit card, a line of credit, an overdraft on your chequing account or a new car loan or mortgage. While there are organizations that claim they can quickly improve your credit, the reality is much more basic: You rebuild your credit over time by following good credit practices.
How to Repair Bad Credit
If you have bad credit and want to know how to rebuild your credit score, the most important thing to be aware of is you can’t drastically improve your credit score overnight unless there is an error in your report and you can convince the credit reporting firm to have the error corrected.
Instead, to improve your credit score so you will once again qualify for affordable loans and credit cards, you’ll need to use good credit practices over time. Several factors affect your credit score, with your payment history being the most important.
To improve your credit, you’ll need to establish a history of borrowing reasonable amounts and successfully paying down your debts on time.
How to Repair Credit Fast
One of the most common questions is “How long does it take to repair credit?” This is an excellent question, since having bad credit can make your financial life much more difficult. However, if you want to know how to fix your credit, you need to acknowledge that the process will take time. The only way to improve your credit score instantly is if there is an error in your credit report and you have it corrected by requesting the correction from the credit reporting agency (in Canada that would be either Equifax or TransUnion). If your credit problems are the result of too much credit, applying for credit too often, or missed payments, you’ll need to follow good credit habits for a multi-year period. This will gradually help to improve your credit score.
The length of time it will take to repair your credit depends primarily on your current credit situation. It could take anywhere from a few months to a few years to rebuild your credit if it has been damaged in any way.
Credit Repair Tips and Advice
If you’re searching for how to fix your credit, one thing you’ll want to do is find out what’s currently showing in your credit report. The two major credit bureaus in Canada are Equifax and TransUnion. They each maintain their own credit record databases and generate credit scores based on the information they receive bi-weekly from your creditors.
You can get a copy of your credit report from these bureaus by requesting one. There is no charge to have a copy of your credit report mailed to you, but you will need to pay to have an electronic copy delivered to you by email. This will give you a list of your creditors, your credit history (including any missed payments over multiple years), any collection agencies who have filed paperwork that is registered with the credit bureau, as well as your work and home address history. This report will also show you what is known as your Beacon Score, which is a number representing your credit worthiness.
Once you know what’s in your credit report, you can use that information to see what might be damaging your credit, then determine the steps you’ll need to take to rebuild your credit, and create a strategy for improving your credit score.
Ways to Rebuild/Repair Your Credit
Whether you’re looking for credit repair Ontario or anywhere else in Canada, the same facts remain: Rebuilding your credit takes time. Unless there’s an error in your credit report and you have this error corrected or removed by requesting the correction in writing from the credit reporting agency, you’ll need to build a long history of good credit habits to improve your situation.
There are several factors that affect your credit report, including:
- The age of your credit accounts. If you’ve used a credit card for a lengthy period of time, for example, this is considered to be a positive
- On-time payment of bills. Paying your bills on time is one of the most important aspects of your credit report.
- The types of credit you have. Lenders like to see that you don’t have too many accounts open and that the ones you have are varied (such as a mix of credit cards, installment loans like a car loan, home mortgages, etc.)
- How many accounts you’ve opened recently. If you’ve opened a lot of credit accounts recently, or applied for a lot of new credit all at once, lenders may start to get concerned about your ability to make ends meet and may interpret your applications for new credit as a way for you to juggle your ongoing expenses. This can then affect your ability to obtain new credit and could negatively alter your credit score.
- Your outstanding balances relative to how much credit you have available. Creditors don’t like to see situations where a person is “maxed out” on their credit accounts. It’s best to use only a portion of the credit you have available. The rough target is approximately 30% of the credit available. Any more then that will affect your credit rating.
The answer to how to fix your credit is to regularly review for these factors and make sure you are being responsible in your use of credit. This normally entails borrowing a reasonable amount, paying it back on time, and not using too much of your available credit or applying for too many new credit cards or loans.
Credit Cards to Rebuild/Repair Credit
If you’re searching for “how to fix your credit Canada” (or any similar terms), you’ve likely come to the conclusion that the most expedient way to rebuild your credit is to borrow reasonable amounts of money and pay the loans back on time. One method of doing this is to use a credit card.
If you make purchases using a credit card, then pay your monthly bill by the payment due date, you will improve your credit score (unless you’re using a large percentage of your available credit). In general, lenders prefer to see their customers use 30% or less of the credit they have available on the card.
When you use a credit card for this purpose, you’ll need to make sure you pay all of your credit card bills by the statement due dates and that you have a plan developed for how you will pay off each purchase you make before you make it. Otherwise, you could end up in severe debt distress.
Unsecured credit card repair involves using a standard credit card (as opposed to a secured card, which requires putting down a small deposit). Unsecured credit cards often charge lower interest rates than secured cards will (and do not require a deposit). However, these cards may not be available to people who have very poor credit. If you have poor credit or no credit, you may have no option but to get a secured credit card instead.
Prepaid Credit Cards to Repair You Credit
If you have poor credit, you very like will not be able to obtain a regular credit card. People who are dealing with credit repair (as well as those who are in bankruptcy or in a consumer proposal) credit may find themselves dealing with this obstacle to credit rebuilding.
A secured credit card is one that is backed by a deposit. You put down a certain amount (Anywhere from $75 to $500, for example, an amount determined by the lender) and in return you receive a credit card with a limit similar to (or higher) then your deposit. You can then use this secured credit card as you would a normal card. If you use a secured credit card for on-going purchases and pay your bills by the statement due date, you will improve your credit score over time, just as if you had used a standard (i.e. unsecured) credit card. This can be an excellent way to repair credit if you are unable to obtain a traditional credit card.
However, it’s important to note that a secured credit card is different from a prepaid card. Many prepaid credit cards work much more like a gift card in that they are designed for one-time use. You prepay a specific amount, receive a card with that amount of credit on it, and once it’s used up, the card is empty. A variant on the prepaid card is a reloadable prepaid card which allows you to reload money on to the card as you need it. Keep in mind that none of these cards allow you to carry a balance and they do not report a score to the credit bureaus. This means you cannot use a prepaid credit card (either one-time use or reloadable) to repair your credit score.
Using Credit Cards After Bankruptcy to Rebuild Credit
When it comes to credit repair and bankruptcy, it’s important to note that filing for bankruptcy will negatively affect your credit rating. However, once you have been discharged from bankruptcy and your debts have been eliminated, you are free to begin rebuilding your credit.
If you’re not able to get a standard, unsecured credit card due to your bankruptcy, you can still use one of a number of excellent secured credit cards to repair your credit. By using a secured card to make purchases and paying your bills when they are due, you will rebuild your credit over time. The same rules apply to consumer proposal credit repair. However, in the case of a consumer proposal you don’t have to wait until the proposal is completed to obtain a new secured credit card. You can actually obtain one as soon as the proposal has been accepted by the majority of your creditors and the court (which is usually 60 days). This means people who are in consumer proposals can actually begin rebuilding their credit while in the proposal.
How Long Does It Take to Repair/Build Credit?
One of the most common questions people have is “How long does it take to repair credit?” The answer is that it depends on your financial situation and the current state of your credit rating. Some people may be able to rebuild their credit by following good credit practices for six months, while it could take six or seven years for others.
If you’re searching for “How long does it take to repair credit?” it’s important not to believe any firm that claims they can fix your credit score overnight for a fee. There is no such thing as a credit rebuild magic wand that can be waved over your credit and it will instantly be repaired. Rather, the only way to instantly fix your credit is if there is an error in your report and you have the credit reporting firm correct it by request. You can do this yourself for free. But other then that scenario, no one is able to repair your credit instantly, either for free or for a cost. If anyone is promising this, you should be extremely skeptical of their claims.
Can a Secured Credit Card Help Reduce Debt?
A secured credit card is a credit card that is backed by a deposit. Most people who get these cards do so because they have damaged credit and as a result are unable to obtain a traditional unsecured card. A credit card does not reduce your debt but using such a card responsibly and paying your bills on time can improve your credit score over time. Secured credit card repair can be helpful if you have bad credit.
Using secured credit cards to repair credit is a method that can be very successful if you are diligent about not borrowing too much and always repaying your bills on time.
Unsecured Credit Cards to Rebuild Credit
Following good credit habits (borrowing within a reasonable amount, paying down your card by the statement due date, etc.) will help you improve your credit score over time. Similarly, obtaining an unsecured loan to help with your credit repair is possible if you borrow reasonable amounts and pay your loan back on time.
However, if you have poor credit, you may not be able to obtain a loan or a traditional credit card. If you are in this situation, you may be searching for “Unsecured loans credit repair” or another similar term to learn more and to improve your situation.
While using a traditional unsecured credit card can help you rebuild your credit you may need to start off with a secured card first. Many people who have poor credit and who cannot get an unsecured card are able to get a secured credit card. These cards are backed by a deposit and otherwise function like standard credit cards, so you can use them to improve your credit rating over time.
How Do Credit Repair Services Work?
If you want to know how to fix your credit, Canada has a number of firms that claim to be able to do exactly that. But do these companies actually do anything? And are they worth working with?
First of all, it’s important to note that even the best credit repair firms cannot immediately fix your credit. Unless there are errors in your credit report (which you can correct yourself by writing to the credit reporting agency), it takes time to rebuild your credit and no one can do it for you. You need to repair your credit by following good credit habits and slowly improving your score over time.
Some credit repair services may provide advice and guidance on how to improve your credit situation, and this can be helpful, but remember that no one can provide a magical “fix” to your credit quickly. It takes time and effort. And despite what some firms claims, no one is able to erase or modify your credit report, unless there is an existing error in your report.
How to Repair Your Credit Yourself
As mentioned, you do not need to use a credit repair service to rebuild your credit. These services may provide advice but, if you want to know how to repair credit, it’s important to practice good credit habits regularly.
By borrowing reasonable amounts and paying your bills on time, you can repair your credit yourself. Rather than searching for “Credit repair Alberta” or any other such terms to find a company that can help you, you can improve your credit by yourself over time by not borrowing more than you can afford to repay, by paying your bills on time, and by not missing payments.
If you want to know how to rebuild credit, know that it takes a great deal of time and effort, but rebuilding your credit is certainly possible by following the rules we’ve listed here.
How Much Does Credit Repair Cost?
Some companies charge a fee to coach you on credit management and how to build good credit habits. These services can be helpful, but make sure you know what you are paying for before you sign up. No one, not even the best credit repair companies, can guarantee that your credit score will be fixed within a certain timeframe.
If you’re searching for “credit repair Ontario”, “credit repair British Columbia”, or any other similar terms, you likely have poor credit and wish to improve your situation. It’s important to note that credit repair isn’t something that can be accomplished with the flick of a switch. Rebuilding your credit profile takes time and patience.
Any company that claims to be able to fix your credit instantly or remove negative items from your report by paying them a fee is not being truthful with you. The only way to get anything removed from your credit report is if the item is listed there in error, and you can do this yourself by providing proof of the error to the credit bureau in writing. Not even the best credit repair companies can fix your credit overnight. It cannot be done and any firm that promises you they can do so is not being truthful with you.
Credit Repair Ontario
If you’re looking for credit repair Ontario or in any other province, it’s very important to understand the limitations of what credit repair companies can do. No one can immediately fix your credit or remove items from your credit report, unless there are errors in your report.
Luckily you can get a copy of your credit report for free and correct these errors yourself. You will need to have proof to support your claims, which you can send to the credit reporting agency.
To improve your credit score, you’ll need to follow good credit habits for a long period of time. It takes time and patience to build up or rebuild a credit rating and enhance your credit report.
Credit Repair Alberta
“Credit repair Alberta” is a common search request, but it’s important to remember that building credit (or rebuilding credit) takes time. Unless there is a mistake in your credit report, there’s nothing you or anyone else can do to improve your credit instantly. There’s no way to remove items from a credit report unless they are listed there in error. Even the best credit repair companies cannot do this.
If you’re looking for credit repair Alberta or any other province, know that it takes time to rebuild your credit. By borrowing reasonable amounts and making your payments on time, you can improve your credit. A good start would be a secured credit card, eventually transitioning to a more traditional credit card. Over time, and with a lot of patience, you can rebuild your credit.
Credit Repair British Columbia
The important fact to know about credit repair British Columbia or anywhere in Canada is that it takes time. You need to follow good credit habits for awhile to see a significant improvement in your credit score.
Some companies that offer credit repair British Columbia or across Canada promise a “quick fix” or say they can remove negative items from your credit report for a fee. This isn’t true. The only way to remove anything from your credit report is if it is there in error on your report and you are able to prove that the error should be corrected. You do this by writing to the credit reporting bureau with supporting paperwork to prove the error exists.
Credit Repair Loans
Borrowing reasonable amounts and paying your bills on time is the key to rebuild your credit. However, if you have poor credit, it can sometimes be difficult to get a loan. By using unsecured loans credit repair is possible, but it is often difficult for people with poor credit to get these loans without a co-signer.
If you can’t get a credit card, it becomes tough to show that you can responsibly borrow money. In this situation, a person can use a special type of credit card, known as a secured credit card, to repair their credit. A secured credit card requires a deposit, so people who have poor credit are often able to get these loans even if they can’t get an unsecured loan as the deposit protects the lender from default. A secured card can be used to rebuild your credit in situations where unsecured loans credit repair isn’t an option.
Credit Repair and Foreclosure
If you have defaulted on your home and have experienced a foreclosure, you have also likely done significant damage to your credit score. This means that unsecured credit card repair may not be an option for you, since getting an unsecured card can be difficult for someone with poor credit after such a default.
A secured credit card may be an option, but it’s important to solve the underlying financial issues that led to the property default as well. Talking to a Licensed Insolvency Trustee can help you understand the options available to you and help you resolve your financial issues so you won’t find yourself back in the same situation a second time down the road.
For instance, the need for credit repair and bankruptcy often go together. If you’ve missed bill payments or suffered a foreclosure and wrecked your credit score, filing for bankruptcy may be an option for you.
How do Credit Companies Repair Credit?
If you are looking for help with how to fix your credit Canada offers many options. However, the reality is that you cannot fix bad credit overnight unless there is an error in your credit report. Not even the best credit repair companies can change or “fix” your credit report. While some credit companies can help you repair credit by teaching you good credit practices and showing you what you’ll need to do to manage your debt and pay your bills on time, be very skeptical of any organization that claims to be able to fix your credit quickly. It cannot be done.
Are Credit Repair Companies Legitimate?
As mentioned, if you want to know how to repair credit, the answer is to follow good credit practices over time. Some credit repair companies will help you rebuild your credit by working with you to make your debt load more manageable (such as by negotiating lower interest rates with your creditors) or by teaching you strategies you can use to tackle your debt.
However, if a company insists that the best way to fix your credit is to go into your credit report and “fix” or remove certain records, you should be skeptical. The only items that can be removed from a credit report are those that are incorrect (such as a car loan that you might have paid off but the lender has forgotten to remove the lien, for example). You can correct these errors on your own by sending the credit bureau proof of the error (such as a statement showing that a bill has been paid in full, for instance).
Secured Vs. Unsecured Credit Cards for Credit Repair
If you’d like to repair your credit, you need to show that you can borrow a reasonable amount and repay it either time or over a reasonable amount of time. Two ways to do this are by using secured credit cards to repair credit or through unsecured credit card repair.
An unsecured credit card is a traditional credit card which you can use to make purchases and pay the money back monthly. A secured credit card works in the same way, but these cards are backed by a deposit. You put down a certain amount of money (anywhere from $75 to $500, with the amount required varying based on the lender’s requirements) and in turn you receive a secured credit card that you can use just like a traditional credit card.
Secured credit card repair is useful for those who are unable to get an unsecured card due to poor credit. In most cases, even if you’re unable to get an unsecured credit card, you should be able to get a secured card. You can then use secured credit card repair methods (such as using the card for small amounts such as gasoline or groceries and paying the bill on time) to improve your credit score.
Credit Repair After Bankruptcy
Filing for bankruptcy can be an option for those who are struggling with debt. However, while bankruptcy will eliminate your unsecured debts, it will also negatively affect your credit score.
If you want to know how to rebuild credit after bankruptcy, the process is the same as it is for anyone who is looking for credit repair. You need to be able to borrow a reasonable amount of funds from a lender and then pay your bills on time.
However, it is often difficult for people who have filed for bankruptcy to get new loans such as a traditional credit card. In these situations, secured credit card repair is an option.
Even if you have filed for bankruptcy, you can likely get a secured credit card, which is a card that is backed by a deposit.
In situations where unsecured credit card repair isn’t possible (such as a bankruptcy), you can still work to rebuild your credit using a secured card once your bankruptcy has been successfully discharged by the Trustee and the court. The same situation is true for consumer proposals credit repair is an option, but a secured credit card may be necessary at first to get started rebuilding.
Is Credit Repair Legal?
Companies are allowed to offer credit repair services in Canada. However, if you are looking for Credit repair, it’s important to understand what is actually possible before you agree to work with a company.
Any organization that promises to fix your credit instantly or by a certain date is likely not being truthful. The answer to “how long does it take to repair credit?” is that this timeframe varies depending on your individual situation. It is unlikely that anyone will honestly be able to fix your credit completely within in a guaranteed timeframe. Credit repair takes time and patience.
Credit Repair Laws
If you’re searching for “how to fix your credit Canada”, you have likely come across several credit repair companies. However, while it is legal to offer credit repair services in Canada, know that no one can go in to your credit report and “fix” or change the information on it, unless there is an error in your report. Be very cautious of any company that claims to be able to do this.
How We Can Help
If you are searching for how to repair credit or how to rebuild credit, it’s important to know that the only way to truly improve your credit rating is to pay your debts on time. If you’re overwhelmed by debt and can’t meet your financial commitments, we can help.
By solving your debt issues and reducing or eliminating your debts, you can put yourself in a stronger financial position. Then you can start to rebuild your credit score.
Credit repair and bankruptcy and consumer proposals credit repair are common concerns, and only Licensed Insolvency Trustees (such as our experienced team at Farber) can administer bankruptcies and consumer proposals. These debt relief processes can be used to reduce or eliminate your debt so you can once again manage your bill payments and begin to rebuild your financial life. We call it “a fresh start”.