How to Repair a Bad Credit History?
More often than not, bad credit is an issue many Canadians face at least once in their lifetime and are left in the dark when it comes to solving this issue. One may obtain bad credit due to inconsistent payments that result in ongoing debt, and it can be quite difficult to break the cycle.
This article will go through the consequences of having bad credit history and showcase adequate solutions for you to repair your credit. Read on to find out what you can do about your bad credit and discover how Risman Zysman can assist you.
What Causes Bad Credit and How Does it Affect My Life?
It is possible for someone to obtain a bad credit score due to inaccurate or late payments, very high balances, bankruptcy filing, or inconsistent credit history. Having a positive line of credit is essential for people who wish to get benefits from banks and lenders, and receive more trust from dealerships or mortgage lenders in the future – however, with a bad credit history, it becomes difficult for banks and lenders to trust that an individual will be able to keep up with their financial obligations.
If you currently face an issue with bad credit, not taking appropriate steps to solve the problem and improve the quality of your credit score can bring negative effects on other aspects of your life. Not fixing your bad credit can prevent you from receiving approval for new credit cards or personal loans, applying for a mortgage or financing a car.
Depending on your professional experience and work field, a bad credit can stop you from getting certain job opportunities, getting insurance you would otherwise be eligible for, starting a business, or renting a place to live.
Fixing Bad Credit: How You Can Do It
Lenders can easily reject any credit requests from you if you don’t take the initiative to repair your credit – and repairing bad credit requires a lot of patience since it is a process that takes time. There are no easy fixtures for a bad credit situation.
However, by adopting certain habits, your score can certainly improve over time. Such habits are as follows:
Check your credit report often
By looking at your report every week or every month, you can easily have a clear picture of where your expenses are going and how you can improve your credit balance. You can also keep track of your monthly payments, bills and all credit cards you owe.
Make full payments on time every month
When you pay your credit card balance on full every month, you are showcasing to your bank that you are a responsible consumer who pays their credit card debt on time. Paying off your statement balances to their full amount on a monthly basis ensures that your credit score recovers fast.
Keep your credit utilization ratio low
The ideal percentage credit utilizations should have is that of 30% – so, for example, if your credit card limit is a thousand dollars, your credit utilization should be $300. This ratio is the ideal balance amount you’d have to pay every month.
Reduce the number of credit cards you have
It’s alright to have a few credit cards, but not too many – lenders can easily check where you have credit card debt and how much you owe in different accounts and cards. If you have extended bad credit among different cards, it might be difficult to keep track of all of them and make payments whenever necessary.
Don’t keep too many credit accounts active
Having multiple accounts can give lenders a bad impression on your behalf – when you open many accounts in a short period of time, you become suspicious of risky activities. Similarly to having a few credit cards, it is best to have a few accounts and keep a close eye on them.
Another way of repairing bad credit is by relying on credit repair companies; however, in order to do so, you must ensure the company is legit and reliable. Thanks to the Credit Repair Organizations Act (CROA), consumers are now able to avoid credit repair scams that have happened in the past – the Act states that credit repair companies are:
- Forbidden from demanding payments until their services are complete
- Forbidden from altering a client’s credit account or identity in order to change their credit history
- Required to provide consumers with a legit and clear written contract with the provides services and proper terms and conditions
- Prohibited from forcing consumers to sign any documents other than the contract
- Unable to mislead consumers regarding the services they offer
Counting on credit repair companies can be of great help and get debt relief for some people as long as such companies are professional and honest.
If You Have a Bad Credit, Talk to Our Trustees at Rysman Zysman Today
Our licensed insolvency trustees are more than capable of helping you with repairing your credit. We have years of experience assisting our clients with their poor credit scores and can come up with solutions that are tailored to your situation.
To know more, call us at 416-222-4600 and get a free consultation today!
FAQ
How long will it take me to repair my credit?
The timing varies depending on each situation – if your credit history was gravely affected by bad credit, it might take a long time until you can fully repair your credit.
How can I repair my credit?
To easily repair your credit, first know that the process takes time and requires patience. Secondly, make sure to pay your balance on time and keep your utilization as low as 30%. If you have any doubts, talk to a licensed insolvency trustee at Risman Zysman.