Looking to improve your credit rating after having a bad credit situation due to poor payment history or else, previous insolvency, bankruptcy or consumer proposal. Remember, there is no quick fix but you can get back on track if you follow the right path. In your situation, the best solution is prepaid credit cards or a secured credit cards that are the easiest to obtain. It can help you to establish or rebuild your credit history, and let you access credit when you need it.
If you’re new to Canada having no credit history or if you’re a Canadian citizen trying to rebuild your credit rating for your ruined credit history, it’s not always easy to get approved for a credit card, where a secured credit card is easy to get a credit card in all kinds of credit ratings and financial difficulties and its the one you need it to establish or rebuild your credit history. There are plenty of secured credit cards from various banks and non-banking financial companies that are being offered in the Canadian market today. You should be smart in selecting a good secured card as secured credit cards usually require processing charges, application fees and annual fees where regular credit cards don’t.
Here’s an article that specially selected to reproduce here from the Financial Consumer Agency of Canada to help website visitors looking to get an authentic answer from a reliable source on; how to rebuild your credit history?
Rebuilding Your Credit
Even if you have made money mistakes in the past, you can rebuild your credit history and become a borrower in good standing. It is important to have a good credit history if you want to borrow money. The better your credit report and score, the better the terms of your loans and credit will be (e.g. lower interest rates).
However, you have harmed your credit history and score if:
- you did not pay at least the minimum balance on your debts
- you made late payments
- you went over your credit limit
- you missed one or several payments
- you stopped making payments altogether
- you have too much credit and you use it
- your debt was referred to a collection
- you made a consumer proposal
- you declared bankruptcy.
A bad credit report and score can mean you do not get approved for a loan, or you do not receive the best loan terms (e.g. higher interest rate).
How to rebuild your credit history
- Apply for a secured credit card. Secured credit cards require you to leave a deposit with the credit card issuer as a guarantee. The deposit is usually equivalent to the card limit but can be higher. For instance, if you want a limit of $500, you may be asked to leave a deposit of $500. Once you’ve shown that you pay the balance regularly and have built a payment history, you can ask that the security requirement be dropped and that the deposit be returned.
- Make at least the minimum payment by the due date. If you cannot pay off your balance in full each month, make at least the minimum payment on each of your debts on time. Late payments will count against you and negatively impact your credit score and credit report.
- Do not apply for too many credit and loan products. Having too much credit can also negatively affect your credit report. Keep your available credit at a minimum. Do not fill in too many applications for credit and loans because every time you do, your credit history is checked. Each credit check can affect your credit score.
- Review your statements. When you are in debt, avoiding your monthly statements may cost you. Mistakes happen and you only have a limited time to correct them. Always review your statements to make sure there are no transactions charged in error and that your payments are recorded correctly. Report any mistakes as soon as possible.
- Check your credit report annually. You are entitled to receive a free copy of your credit report annually from each of Canada’s two credit rating agencies, Equifax and TransUnion. Check your credit report annually for errors and get them corrected as soon as possible.
Prepaid cards do not help you build credit. You may choose to use a prepaid card as a payment option, but its use is not tracked by the credit rating agencies.
Productive Suggestion: Use credit responsibly
“There are no quick fixes to repairing your credit history. You have to prove you are a responsible borrower to lenders, and that may take time. Whether you are rebuilding your credit history or trying to maintain a good credit score, you should always use credit responsibly.”
Alternate to secured credit cards to rebuild your credit history
How to repair your credit in Canada or rebuild your history? In the past secure credit card is the only option available but now the Canadian market is offering another innovative alternate to establish, and or rebuild your credit history is a Credit Repair Loan that also works in bankruptcy and consumer proposal issues besides don’t overburden their customers in relation to high-interest rate secured credit cards that ask for the cash “upfront” at the time you receive your credit card. As many of such consumers trying to rebuild their credit may have a difficult time doing so.