It can be difficult for you to obtain a loan if you have a bad credit report. Rebuilding your credit can certainly help. Now, unless you can wait out the seven year period (that is how long poor credit marks stay on report, usually), you can attempt to fix your credit rating on your own. There are several things you can do when it comes to credit repair:
- Get a copy of your credit report, and examine it. You will not be able to do a thing on rebuilding your credit until you know exactly what your problems are.
- Pay your bills. If the single negative thing on your credit report is $200 dollars on an old credit card, try to save up that amount of money, contact the credit card company, and pay it off. Paying off your debts is the easiest way of repairing your credit, but if you find yourself unable to make the payments, you may need to consider bankruptcy. Personal bankruptcy tends to be considered the last resort option.
- Borrowing some fully secured money may help you repair your credit. Secured loans are those that are backed up by an asset or guarantee (car loans, for example). If you do not pay, your creditor will sell the asset. You may also want to consider having someone guarantee or co-sign your debt. In this case, if you pay the loan your credit record will improve, but if you do not, your co-signor will be the one responsible for the payment.
- Next, obtaining a secured credit card will contribute to rebuilding your credit history. You can do this by putting a certain amount of money on a deposit with a bank, and pledging the money as security. If you do not make the necessary payments, the bank will simply take that money out of your deposit, and reduce your available credit accordingly. But if you do make the payments, it will improve your record.
- Borrow for an RRSP. Banks are generally more impressed by people with RRSPs because it indicates that they are planning for their future. When you receive a tax refund, use that money to repay the loan. You will be paying off the loan faster than necessary, and it will improve your credit report considerably.
- Borrow even if you don’t need to. Get a small line of credit and use it for paying off bills, then pay off the line immediately. Repeating this step will help you rebuild your credit record.
The best advice when it comes to rebuilding credit is to pay all of your bills on time. Remember: you would not need to worry about credit repair if you did not have a bad credit report to begin with. Now you want to prove to potential lenders that you have become responsible with money and that you can handle your finances.
