Okay, so let’s get to it. If you’re looking to clean up your credit and restore your credit score, you probably don’t need the services of a credit repair company or agency. In this blog you can find the help you need to help fix and rebuild your credit score as fast as humanly possible for yourself for free. All you essentially need to do is follow the 5 steps listed below.
In addition to this, I’ve also included links below to a number of other great resources that will provide you with more help in specific areas.
#1 Correcting Mistakes On Your Report
Correcting any mistakes on your credit report. In Canada, there are 2 credit reporting agencies, Equifax and TransUnion. Because banks and finance companies have millions of customers and agencies creating scores for many millions of people, mistakes are going to be made from time to time. Most of the time, these mistakes are only minor, but sometimes they are big enough to negatively impact your credit rating.
The first thing you should do is obtain a free copy of a credit report. Click here to get a copy of yours for free. Once you have it, you should carefully look through it and make sure all the information it contains is accurate. If you find any errors, you can either speak with your creditor who’s incorrectly reporting the information and ask them to correct it. Or you can dispute the information through the credit reporting agencies dispute process. It’s important that you check both credit reports with each agency, as not all creditors will report to both of the agencies.
One additional tip for this section would be that, if one of the credit reporting agencies is reporting negative information on a debt or a form of debt that is more than 7 years old, you could request that they remove that information because it’s no longer relevant. Removing old negative information from your credit report can really improve your credit score.
#2 Remove Notices From The Public Record
Getting collection notices removed from the public records section of your credit report. When reviewing your credit report, you may notice there’s a lot of different sections. The main section shows the different types of credit or debts that you have, from credit cards, line of credit, overdraft, car loans, even student loans. It also states who the company the debt is with, the credit limit, and your payment history over the past 7 years.
This information cannot be removed from your credit report, it’s what the lender’s computer system reports on. However, near the bottom of the report, it can obtain things like old parking tickets, and old unpaid cell phone bills or an unpaid utility bill, or a small debt some company might claim that you owe them. Information in the public record section is not permanent. It can be changed, and it’s usually worth changing because it can have a devastating effect on your credit score. As soon as the public record section is cleaned up and completely clear, your credit score should improve dramatically.
#3 Reduce Your Credit Balances
If the balance you are carrying on your credit cards or line of credit or overdraft is over 50% of your credit limit, this can be hurting your credit score. One of the big factors in determining your credit score is how much credit you are using compared to your credit limits. If you have a $5,000 limit on one of your credit cards, and your balance is $500, then you are only using 10% of your limit. However, if you have a balance of $4500 on that card, then you’re using 90% of your credit.
This is why the amount of debt you’re carrying compared to your credit limit is important to lenders. It’s one way of estimating how much room you have before you have a problem. You don’t actually want to be using more than 75% of your credit limit. Doing this will significantly hurt your credit score. If you don’t want to hurt your credit score, make sure all your balances are under 50% of the limit. reducing them to 30 will make it look even better.
#4 Make Sure You Have Spare Credit Not In Use
Continuing on our discussion of credit limits based on information outlined in number 3, you can see that, if you’re not carrying a balance on a credit card or a line of credit of more than 30% of your credit limit, you’re going to have a lot of credit that’s available to you that you’re not using. This is one of the best ways to restore your credit score, and it shows that you’re not only responsible, but it makes it unlikely that, in an emergency or a minor financial setback, that it could derail your finances and prevent you from paying your debts.
#5 Establishing A Good Payment History
Without question, the very best way to bring about the restoration of your credit is always paying your bills on time and establishing a solid payment history with no late payments. And this takes time, and that’s often what people with bad credit don’t like to hear. But that’s the way the credit system is built. It’s built on to recognize good payment history over time. If you have a particular credit card or line of credit for a long time, you can use this aspect of the credit reporting system to your advantage. The credit scoring system likes to see a lot of history. If you can clean up a credit card that was opened many years ago and establish a new history of no late payments, the age of the account can help restore your credit as old late payments and history falls off.
So, there you have it, the 5 steps you need to take to repair and restore your credit.
- Correct any mistakes on your credit reports
- Get notices removed from the public record
- Reduce your credit balance
- Make sure you have a fair amount of credit you’re not using
- Establish a good payment history
The only way you can dramatically boost your credit score within a month or 2 is by cleaning up the public records section of your credit report, paying down a substantial amount of debt if you are close to your credit limits or getting a creditor or the credit bureau to start reporting negative information that is more than 7 years old.
If this blog leads to more questions, or you’d like to talk to somebody about your credit situation, please don’t hesitate to reach out so I can put you in touch with somebody who can help.
Additional Links To Helpful Information
- Credit Report Here
https://www.mymoneycoach.ca/credit/check-credit-rating-report-score - How Credit Scores are Calculated –
https://www.mymoneycoach.ca/credit/check-credit-rating-report-score/what-is-a-credit-score - How to Reestablish credit
https://www.mymoneycoach.ca/credit/building-credit/how-to-establish-credit