Fix Bad Credit

1. Apply for a secured Credit Card (Both Parties) shared or joint credit should be avoided, separate accounts should be applied for. (Home Trust Secured VISA) is recommended.2. You need min. three active "trade lines". i.e. credit card, Loans and one large loan (car or RSP)

3. Don't max out your cards; keep your utilization below 75% - this is very important; 50% max is even better. If you are over 75% now, you can pay off some of your debt, or the quick way of fixing it is to increase your maximum limit; or both.

4. Make your monthly payments on time; put the minimum amount on auto payment. If you want to pay extra, you can do that any time during the month at your leisure.

5. Paying off your cards each month is a BAD idea! Always leave a few dollars owing. If you don’t, there’ll be no balance showing on the report – the accounts will look “inactive”.

6. If you don’t qualify for a credit a card, you can always get a secured card by putting a deposit. Try CitiFinancial ($200), Capital One ($200), Home Trust ($1,000). Most lenders want to see a minimum limit of $1,500. Don’t keep going back to the same bank applying over and over – it’s pointless! And waiting a couple of months won’t help either if that’s what they tell you.

7. Large Loan. Once you’ve got a bit of credit re-established, you’ll need to get a large loan (10k or more). Deposit it in a separate account, with monthly loan payments on auto. You’ll have to top up that account as the end of the loan nears to cover interest costs. Yes, it’s going to cost you a bit of money, but it’s a necessary evil. If you don’t, you’ll be paying higher interest on your mortgage, and insurance, costing you a lot more, or worse, you won’t qualify for a mortgage at all !!

8. An unsecured line of credit is really no different from a credit card, except it’s usually got a much higher limit and lower interest rate. You’ll apply for this once your credit score is over 680.

9. When applying for credit, always try for as much as possible. If you want to increase your limit do it when you owe very little. Don’t wait until you’re maxed out (which you’ve now learned not to do anyway – right?!!).

10. Joint Cards do nothing for the secondary cardholder. You must have your own card(s)!! Joint loans (which are not the same as credit cards) help both parties.

11. Short money for bills? If you are paying utilities where you live now – short them some money first, it doesn’t show on your bureau (unless you outright default / refuse to pay). Next on the list would be rent. Loans & cards last. Get an Overdraft as soon as you qualify – this will save a lot of problems.

Creditor Disputes

If you get into a dispute with a creditor, don’t simply refuse to pay it and think that’s the end of it – IT’S NOT!!!! You will apply for a loan one day only to find they stuck it on your bureau. It happens all the time. Pay the bill. Write “Paid in Protest” on the cheque. Then take it to small claims court to get your money back. It costs $150 total to file in small claims which you will ask to get back if you win. It’s not hard. Keep all your notes, receipts etc. If you loose, you’ve already paid the bill. Either way you’ve avoided bad credit.

Refrain from pulling your bureau unnecessarily. Again – it’s all pluses and minuses. Pulling your bureau is a minus. You can pull it a few times a year without it hurting you, but pulling it too often can hurt your score. This is one of the benefits of using a mortgage broker. They pull it once, and shop it as often as I need to without it affecting your score.

NOTE: Mortgages, past or present, do NOT show on your bureau, and do NOT help your credit. If you default on a mortgage though – that will show up – good luck getting a mortgage then!

Large Loan / Saving a Down Payment

For your large loan, you may wish to borrow for RRSP’s. This kills two birds with one stone, saves for your down payment and builds your credit at the same time. Better still, you’ll get half the loan back in reduced

* Former Bankrupts. If you were just discharged and haven’t rebuilt your credit yet, you’ll need 25% down. The longer it’s been and the more credit building you’ve done the less you’ll need down. If it’s been 2yrs and you’ve completely rebuilt as per the instructions above, all programs will be available to you.

* New Immigrants need one full year of credit /employment to access $0 down payment, otherwise they need 5% – 25% down depending on exact circumstance

Good Luck and remember A good credit rating isn’t something that will happen on its’ own, it’s something you must actively pursue.

Credit Concerns

Bad Credit? This will mean higher lender fees and mortgage rates.
Your credit score is an important indicator of your creditworthiness. The higher your score the better chance you have at getting credit extended you. While many lenders use bureau scores to help them make lending decisions, they also take other aspects into consideration. Lenders will use your credit score to determine if you are likely to pay your bills and also help them place you with the appropriate repayment plan. For example if you have claimed bankruptcy in the past they might place you at a significantly higher interest rate. Visit our Credit Repair Centre for help on repairing or re-establishing your credit.

No Charge Credit Advice!

If you have any questions about your credit please contact me.