It happens and sometimes without really thinking about it; people find themselves on the receiving end of a bad or no credit report.It can come from runaway use of credit; perhaps out of necessity perhaps not.It can emerge from divorce or separation, bankruptcy or just simply never having needed it.These are all valid reasons and there is no shame in this.The shame is that very often credit reports are erroneous and for a number of causes not the least of which is tardiness of reporting by financial institutions.So what can you do?
First, take a deep breath and start making a plan to reestablish or repair your credit rating.To do so requires some effort and persistence but in the end it is you who benefits most.
-Get a Credit Report.In Canada there are several credit reporting agencies, Equifax, TransUnion and Experion, however Equifax is probably the largest and consequently the most often used by credit card companies.You should contact them by registered mail and request a credit report.It is free.Do not pay anyone to get a credit report for you when you can get it yourself.
-Correct any errors on your credit report.Most people are unaware of their credit rating until someone checks and denies you credit for a loan or purchase.How does this happen?Most often is it bad reporting TO the credit bureau.That is not to say they too have not made mistakes.Still, they can be corrected.Once you have your report you should begin to make the corrections.This can be a long process because you have to do so through registered mail with the credit reporting agency and they may have a limit as to how many corrections they will make within a given period of time.This is due to their need to investigate your dispute. Remember Credit Bureaus are not consumer friendly.They are funded by the banks and credit grantors, not the consumer so their service loyalties are most likely to those who feed them.Getting corrections will take time and perseverance.If you are truly being wronged then legal advice may be necessary.
-If you are in bankruptcy get it discharged as soon as possible.This process takes on average about 9 months.This way you can begin to rebuild your credit.
-Show stability in your life.This means that you should be employed in the same workplace and live in the same residence for at least two years.
-Apply for a SECURED Credit Card.This IS a fast way to rebuild or repair a credit rating because every payment is reported to your credit bureau.You could apply for a loan or mortgage but the only time a report will be made in these instances is if you go into default.However credit card financial institutions update their records and report MONTHLY!A secured credit card means you (or a third party) will put up a sum of cash most often equal to the credit limit as a security bond.This security guarantees your card.What it does not do is automatically rebuild your credit.You still have to do that.
-Make your payments on time.This applies to all facets of your life including monthly utilities.Even if this is the minimum amount due it will record the payment as being on time.You will not be in default.Your credit report shows the frequency of times you are in default by 30, 60 or 90 days.Arrange for preauthorized payments to avoid any lapse in payment or late payments.
-Do not run your credit card near the credit limits.This will automatically red flag your account.Less than 90% of the limit is usually safe.
-Limit the number of inquiries into your credit report.If you are seeking a mortgage, do your research before approaching a financial institution or use a mortgage broker.This way there is only one inquiry.The more often your credit report is accessed, the more likely it is to be “red flagged”.Buying a car or other big ticket item?Use your financial institution and get pre-approval for any loan or mortgage.This is one inquiry and pre approval based on YOUR financial situation by those who know you.
-Limit the number of credit cards you hold.It is a fact that with one or two cards you can travel anywhere in the world and have access to your credit.Holding ten credit cards does not mean a better credit rating; in fact it can work against you because there is a greater chance for reporting error.
-If you are going to travel, let your credit card company know in advance!If they see unusual activity on your account they may decline a legitimate transaction.Today they are very concerned with identity theft.
Be patient and persistent but above all, be smart. Use your credit wisely.