What can I do to improve my credit score?

Note: It can take more than 2 years to re-establish your credit (credit score above 680) and remember there are 2 bureaus in Canada and each can report a different score. You must take an ACTIVE approach to re-establishing and maintaining your credit and the sooner you start the better. Using a co-signer may help you get that loan and re-establish your credit quicker.

Car loans - A great way to re-establish your credit is to get a car loan. Some new car manufacturers subsidize the car loan and therefore, it may be easier to get one. Don't pay late, and make sure you don't over-extend yourself.

Prepaid credit cards - A prepaid card is a credit card in which you have made a deposit and are allowed to spend up to the deposit amount. I know this is just like a debit card, but this kind of card is reported to the credit bureau and establishes a payment history. Try and get a minimum limit of $2,000. After a few months, request a normal credit card from the provider. If they say no, ask again in 2 months (don’t give up) or try another company. Home Trust, Horizon Plus, and Capital One are currently offering this service.

Store credit cards - You may pay a much higher interest rate, but these cards can be easier to get. You should not carry a balance anyway. Pay on time and always try paying the balance.

Remove items from your bureau - There are items on your report that you can adjust on your credit report. If an item is in error or has been paid but has not been marked properly on your bureau, you may be able to correct it by calling the financial institution or credit provider. Visit the Equifax and TransUnion web site for more information. Credit bureaus are obligated to review all complaints sent in.

Visit a non-profit credit counselling agency - Credit counsellors can freeze your interest payments and consolidate debt into one payment and potentially stave off bankruptcy. However, please note you may have difficulty getting a competitive interest rate until 1-3 years after your debts are paid and marked as such on your bureau. Important: credit counsellors do not require any professional training and are not licensed, however most agencies have in house training programs for their staff.

Credit repair services

·         Be wary of advertisements promising to "fix" bad credit. Credit repair companies may claim to improve consumers’ poor credit ratings, but, in reality, no credit repairer has the power to change or erase accurate information in a consumer’s file.

·         Watch out for companies that say they’ll "fix" bad credit for a fee — often substantial, usually payable in advance. So-called credit repair clinics say they will arrange to have negative credit information removed from your record — including information about bankruptcies and default judgments. No credit repair clinic has the authority to have negative information removed from a consumer report unless it is inaccurate.

·         It’s illegal for credit repairers to accept advance payment, security for payment or to charge a fee unless their services cause a material improvement to the consumer’s credit file. For example, if an account owed by one consumer appeared on the wrong person’s credit file, a correction of that information achieved through the efforts of the credit repair company would be a material improvement.

·         It’s illegal for a credit repairer to represent that they can cause a material improvement to a consumer’s credit file, prior to examining the consumer’s consumer report.

·         Consumers have a 10-day cooling-off period, which begins from the time they receive a copy of the agreement that meets the requirements of the act. If the company fails to repay the money, the consumer can take the company to court.

·         Credit repairers must provide the consumer with a written, dated contract.