There are many reasons that achieving and maintaining a good credit score is important. If your credit score has dropped as a result of struggling with debt or filing a consumer proposal or a bankruptcy, you’ll quickly realize the limitations it places on you.
In today’s world, most people rely on good credit for a wide variety of activities. Let’s face it, certain purchases can’t easily be handled with cash or your paycheque, and even then, often credit cards are required to simply hold a reservation. Whether you want to borrow at favourable credit rates, get approval for a mortgage, buy a car, or order a credit card, your good or bad credit rating will impact your ability to do so. Without a credit card, for example, simple pastimes like online shopping and car rentals, that we often take for granted, can become impossible.
Credit scores range between 300 and 900. The higher your credit score, the more likely you are to be approved for loans and receive favourable rates. The goal of any rebuilding program is to achieve a score of 650 or higher and qualify for a CMHC approved mortgage. Credit rebuilding is not a quick process, however; it’s a lot easier to damage your credit score than it is to repair it, especially without the right tools and information. Since credit rebuilding is a lengthy process, the sooner you take action, the better off you’ll be. Factors that affect your credit score include:
Payment history. This is the most important factor. Late and missed payments reduce your credit score and make creditors nervous.
How much is owed. Higher credit balances negatively affect your credit rating. It’s ideal to keep the balance owing below 30% of available credit.
Length of credit history. A short and/or poor credit history reduces your score. Using credit responsibly over the long-term is your best bet.
New credit applications. Applying for multiple credit cards and loans in a short period of time is seen as a sign of potential financial difficulty and makes creditors wary. “Hard inquiries” hurt your score, as opposed to “soft inquiries”, which are just checks on your file for updates and won’t show up.
Types of credit. The least significant factor, certain types of credit such as deferred interest or payment plans can indicate financial instability.
When looking for a company to help you build a quality credit score, you might be overwhelmed with companies who say a lot, want to charge you a monthly fee, but maybe not offer any concrete plans. When looking for such a service, you will want to look for the company to offer services such as:
Assessment. Analyze your credit score and help fix any errors that might be affecting it. You also want them to look into addressing any debts in collection, if necessary.
Create a Credit Rebuilding Plan. Create a customized plan to increase your credit score to 650+ within 24 months, using only the best credit rebuilding products in the industry which do not cost you all kinds of your hard earned money. You want a plan that involves helping you get new credit (not debt) with guidance on how to use it effectively as a tool for building your score. (Results assume the client successfully executes the program in its entirety.)
Protect Your Credit Rating. As your credit rating improves, it’s important to maintain good habits and avoid the common credit mistakes that can hurt your score. A good company will educate you about the potential pitfalls, and work with you throughout the process to ensure you’re on track. All your hard work deserves positive results.
Each of these stages involves detailed planning. A good company will personalize a plan to help you achieve your future credit needs. With patience and discipline you can rebuild, even after bankruptcy.
In the meantime, here are a few simple tips to help you get started right away:
Check your credit report. This gives you a clear overview of the issues and visibility to any inconsistencies or errors that need correction. While it may be depressing and downright stressful to see it in black and white, remember, it is just paper and you are taking action to change it for the better. You are entitled to a free yearly copy of your report from each credit bureau, Equifax and TransUnion.
Make minimum payments by the due date. This may be difficult depending on your current financial status but if it’s possible, it will help you to establish a reliable payment history. Missed and late payments hurt when trying to re-establish credit. Be careful if using automatic bill payments, unless you are confident there are sufficient funds in your account. NSF fees and overdrawing your account are bad signs to creditors.
Create a budget. Financial discipline is required to rebuilding your credit score. Take a look at your day-to-day expenses and prioritize spending on what’s most important. Awareness of your spending and saving habits will give you insight and a greater sense of control.
If your overall debt load is just too high, and rebuilding credit is not actually the solution. Please fill out our contact form and we will be sure to get you in touch with someone who is best suited to help you get out of debt. At Getmedebtfree.ca, our team has helped thousands of Canadians deal with their debt since 2010. There are many companies out there who advertise their business as one who can help you get out of debt. But who are they? How do they get paid? Do they offer a full range of options or only what makes them the most money? Will they inform you of all options, even ones they do not provide? These are legitimate questions and should be asked by everyone who is looking for assistance with their debt. At Getmedebtfree.ca, have taken the guess work out of who you can trust, and we refer only to companies who we believe are best suited to offer you solutions, while also maintaining a posture of no pressure and making sure that you are aware of all of your options. Our mission is simple – help as many Canadians as possible get in front of the right people, in order to get out of debt. – Getting out of debt should be a stress reliever, it should not present a whole new world of challenges. If you do not like who we refer you to, or the options they give you, then you are free to walk away. There is no commitment from you just for having a conversation. That being said, and as already mentioned, we have been around the block a time or two in the debt relief world, so we are confident that we refer only to some of the best companies who might be able to help.
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