How Do You Rebuild Your Credit?Aug 7th, 2019
Every day, our team speaks to people from across Ontario who are looking for help rebuilding their credit.
There are many reasons why people get into situations where they have bad credit. Sometimes people have bad credit because they were delinquent on their payments. Other times, it’s as innocent as forgetting to disclose an address change which led to bills being sent to the wrong address and not getting paid.
Whatever the reason is for your bad credit, the good news is you can rebuild your credit — and we’re going to show you how.
Step 1: Pull Your Credit Report
In order to determine how best to rebuild your credit, you need to find out what your credit report (credit bureau) looks like.
When the team at Legacy Auto Credit pulls your credit bureau, we immediately begin looking for errors that might be negatively affecting your credit. Sometimes, errors are as simple as an old cell phone service provider forgetting to close your account.
In the case of errors, we do our best to help you get those fixed and your credit restored. In the case of many missed payments or filing for bankruptcy, pulling your credit bureau informs us of how we can assist you and that helps us come up with a more tailored plan for your situation.
Step 2: Restructure or Pay Down Your Debt
If you are in a state of near insolvency (unable to pay the money you owe), bankruptcy or a Consumer Proposal might be an option. No one wants to declare bankruptcy or file a Consumer Proposal, but there are situations when either a Bankruptcy or a Consumer Proposal is preferable to trying to pay down your debts.
A few examples would be:
- A loss of income leading to an inability to pay debts.
- Despite making your payments, your debt isn’t lowering due to the interest you’re paying, and it’s too much to maintain.
- You have reached your borrowing limit and your bank will not provide you with more financial assistance.
If, however, you are able to make payments against your debts while maintaining the ability to cover all other monthly bills (rent/mortgage, food, clothing, etc.), we’d recommend a strategy to help you pay down your debts.
Step 3: Begin The Credit Rebuilding Process
After we’ve decided how best to deal with your debt, the process of rebuilding your credit begins.
Many people contact us to rebuild their credit through vehicle ownership, as vehicles are something most people need to get to work and run errands. Consistent, on-time payments towards a vehicle are a great way to prove to creditors that you are a responsible borrower.
Step 4: Learn How To Use A Credit Card Properly
Creditors are going to want to see that you can use your credit card responsibly.
We encourage our clients to make small, regular purchases on their credit card that they can afford to pay-off immediately. As an example:
- Tank of gas
- Cell phone bill
- Weekly groceries
These are purchases you’re going to have to make anyway, so making them through your credit card and being diligent on paying off the debt on your card are great ways to rebuild your credit.
Pro Tip: Never max-out your credit limit! In fact, don’t ever go above 50 percent of your credit limit, as even that can negatively affect your credit rating.
Step 5: Make Payments On Time!
Rebuilding your credit is all about showing financial responsibility and paying your creditors back on time. If it’s possible, we suggest to our clients that they pay more than what’s required of them so they can pay down their debt faster. This will also show creditors that your can pay down debt expediently.
Need Help Rebuilding Your Credit?
The credit rebuilding process can be daunting and stressful. This is especially true if you’re not sure where to start or how to get your spending under control.
Fortunately, our expert team of non-commission-based, in-house credit specialists can help you get back on the path towards financial freedom.
Rebuilding credit isn’t typically a fast fix. It often takes five or six years to get back in good standing with creditors.
With Legacy Auto Credit’s approach to credit rebuilding, we’re confident we can get you into a vehicle that fits within your budget, has low interest rates, and can help you begin rebuilding bad credit.
For help with bad credit, contact us.