How To Rebuild Your Credit Rating
Credit rating is very crucial because to get any significant credit, the lending institution has to first check on it. When you have a poor credit report then you might get the money at very exorbitant interest rates or your application is declined altogether. It is thus important to have a good credit report at all times. If you have a bad credit report, all is not lost because you can work to rebuild it. It calls for ice-cold financial discipline as well as putting workable strategies in place. Discussed below are steps to help you in rebuilding your credit.
Assess Your Credit File
This is the first step in rebuilding your credit. You have to establish where you are standing so that you can evaluate the best ways to improve your position. In assessing your credit file you have to do the following:
- Obtain a copy of your credit file from renowned Canadian Credit Bureaus like Trans Union or Equifax.
- Take time to review your credit report. Ensure that it presents the true position of the outstanding debts if any. If there is any discrepancy then you should have it addressed immediately to put your credit report in order.
- If you outstanding debts then work hard to pay them off.
- Clarify that they have updated and current information.
Make sure that all derogatory data is removed from your credit report before working to rebuild your credit.
Rebuild Your Credit File
At this stage, you have to add more effort to rebuild your damaged credit rating. It is not an easy task but with commitment it can be realized. Some of the things that you can do to rebuild your credit file are:
- Get a secured credit card from a bank. This is a type of a credit card that is secured by the deposit that is in your account. The credit card limit is essentially the amount you have in the account but you are required to make regular payments. These payments are usually reported to credit bureaus hence helping to improve your credit rating. You should always make your repayment on time.
- After successfully acquiring a secured credit card, apply for a departmental store card. You should exercise discipline on how you use it so that it will work to rebuild your credit rating and not ruin it.
- Get an overdraft from your bank. Repay on time and pay the agreed amounts so that it can affect your credit file positively.
- Obtain a bank credit card. After utilizing your secured credit card properly then you will graduate to get a bank credit card which will go a long stretch to rebuild your credit file.
- Take several types of loans like mortgage, auto loan and so forth. This will skyrocket your credit rating with time.
All these are gradual steps to rebuilding your damaged credit file. It is not something you can achieve overnight but over a span of time. Makes sure you press on and stick to your plan.
After you have worked hard to rebuild your credit file and have succeeded, the task ahead is to protect it. Remember that it has cost you a lot to rebuild and you do not want to get there again.
As a Canadian, to live an active and successful life you have to borrow but you should use debt wisely to accumulate assets such as houses as well as build wealth.