5 Tips for Repairing Your Credit

Having good credit is essential for financial stability and access to favorable borrowing opportunities. If your credit score has taken a hit due to past mistakes or unforeseen circumstances, don't worry. Repairing your credit is possible, and with a solid plan and commitment, you can improve your creditworthiness. In this blog post, we will explore some effective strategies to repair your credit.

1.    Obtain and monitor your credit report.

The largest credit reporting system in Canada (Equifax) has an online program where you can monitor your credit report closely. This gives you daily access to your credit report, without negatively impacting your score. It allows you to see that your score is on an upward trajectory and will also send you alerts if there are any unsuspecting changes to your credit. I have included a link for you to sign up directly to monitor your score! https://my.equifax.ca/consumer-registration/?lang=en

2.    Pay all bills and debts on time

Although this may seem like an obvious one, consumers don’t often realize how important it really is! When you begin your journey of credit repair, make this your top priority. Any bills missed, or paid even as little as a day late, will have a huge negative impact on your score. Banks and Lenders want to see at least 12 months of no mishaps on your credit. As time goes on, it will become second nature to you will see your credit score increase!

3.    Reduce your Debt

High levels of debt can weigh down your credit score. Begin by focusing on reducing your outstanding balances, especially on high-interest credit cards or loans. Develop a budget that allocates extra funds towards debt repayment. Consider strategies like the debt avalanche or debt snowball method to systematically pay off your debts and gradually improve your credit utilization ratio.

4.    Avoid new credit applications

While actively repairing your credit, you want to try and avoid any and all new credit inquiries. Multiple credit inquiries within a short period of time can negatively impact your credit score as it shows excessive borrowing and financial instability. You will also want to close any credit cards that are not being used, so you have fewer trade lines opened. My recommendation is to keep one or two credit cards open, and close the rest. You can even lock your cards so you are no longer able to use them, but continue making monthly payments.

5.    Obtain a secured pre-paid credit card

This can be super useful if you have a bankruptcy, or consumer proposal in your past. Oftentimes this will leave you with no credit cards or tradelines opened. Although it sounds counterintuitive, if you have no trade lines there is no way of tracking your credit responsibility. A prepaid visa that reports to Equifax can be a super useful way to start building your credit back up again.