Victoria's Real Estate Market - 2015

Nine Credit Repair Tips

This article presents some helpful tips on how to repair and protect your credit score.

Your credit score affects many areas of your life. True, it won’t directly impact your cooking or what’s on Netflix tonight. However, should you want to buy a new TV to binge-watch the next season of your favourite show, you would likely pay using a credit card. The limit on that card and the rates you can get, along with a number of other important aspects of your finances, are determined largely by your credit score.

Know Your Credit Score and Credit History

This is the first and easiest step to take. If you are going to repair your credit rating, you need to know what your credit history is and what is holding down your credit score.

  • You can receive a copy of your credit report for free from either Equifax Canada or TransUnion Canada, Canada’s major credit-reporting agencies. Unfortunately, however, you have to send it in by mail;
  • You can pay Equifax or TransUnion for a digital copy, which is of course faster. But then you have to pay, which is less good.

Once you have obtained your free credit report, check it for errors:

  • Are there any late payments that have been erroneously attributed to your credit history?
  • Are the amounts owing in your credit report accurate?

If you find any errors in your credit report, you should dispute them with your credit bureau.

Make Payments on Time

This might seem obvious but we emphasize making payments on time because it is absolutely crucial to repairing and maintaining your credit rating. Your payment history is the single largest determinant of your credit score. With that in mind, here are some important things to know and some useful tips on how to make your payments on time:

  • Being even a few days late can have a negative impact
  • Paying off a collection account will not remove it from your credit report, so do your best to avoid going to collections
  • Keep at it – the impact of past credit problems lessens with time so that late payment from a year ago has much less weight than a late payment today. Get current and stay current.
  • Set up payment reminders. While your credit card company will likely send you an email every month to remind you, other companies may not. You can even set-up automatic withdrawals to make it easier for you.

Protect Your Credit from Identity Theft

The internet is great and all, but the speed and frequency with which we move information creates a lot of opportunities for a nefarious individual to steal your identity and make purchases using it. This can be extremely damaging to your credit history.

There are services available to help combat this. You can use a fraud alert, a credit freeze, or an identity theft protection service.

You Could Hire A Company, but Think Before You Do

You can hire a company that will try to improve your credit rating for you. Before you do though, there are a few things you should know:

  • A third-party company has no more legal options than you do personally and is not able to do anything that you can not do yourself
  • A credit bureau will not remove negative accurate information that is on your credit report. No such claims to the contrary should be believed.

For more information, click here

Don’t Go Over the Credit Limit on Your Credit Card

This has a big impact on your credit score. Be aware of your credit limit and your current debt levels to avoid this.

Don’t Make Too Many Credit Applications

A high number of credit applications can damage your credit rating. If you are shopping around for a loan, we recommend doing so in a confined period of time, rather than spread out over a longer period of time. This is looked at more favourably as your credit bureau will see it as rate shopping for a single loan, rather than an attempt to take on multiple loans.

Don’t Close Cards Willy-Nilly

While it may be satisfying to close a credit card that you have paid off, this isn’t the best strategy for improving your credit score. Your outstanding debt as a percentage of available credit is used in the calculation of your credit score, so lowering your credit limit can hurt your credit score.

Reduce Your Debt

Easier said than done, but if you want to increase your credit rating, you need to reduce your debt. If you are looking for tips on how to reduce your credit card debt, click here

Don’t Open Too Many Accounts Too Soon

Account age is a factor that goes positively into your credit score. Too many new accounts lowers your average account age and negatively impacts your credit score. For the same reason, you may want to keep an old account open, even if you are not actively using it.