How Long Will It Really Take To Rebuild My Credit?Feb 18th, 2020
If you’re at a stage in your life where you are looking to rebuild your credit, the first question you probably want answered is, “How long will this process take?”
Despite living in a world where instant results are the expectation, there is no magic wand solution to rebuilding your credit. The fact is, it’s going to take long-term dedication and the timeframe will be different for everyone based on their financial circumstances.
However, there are strategies you can implement into your personal and financial life that will help you to efficiently rebuild your credit in as little time as necessary. There are steps you can take today that will help you to quickly boost your credit score. We’ll get into all these tips and tricks in this blog.
Monitor your payment history
The Government of Canada has an entire section of their website dedicated to improving your credit score. Their top recommendation for Canadians is to monitor your payment history as it is the most important factor in rebuilding your credit score.
You can improve your payment history by:
- Making your payments on time — every time.
- At the very least, make the minimum payment — but aim for more than the minimum.
- If you think you’ll have trouble paying a bill, call the lender — call them right away.
- Don’t skip a payment — even if your bill is in dispute.
Don’t use all of your credit
If you have a credit limit of $10,000, that doesn’t mean you should use all $10,000 worth of your credit.
Use only 30% of the credit made available to you. This isn’t a hard and fast rule. You won’t necessarily reduce your credit score for exceeding the 30% ‘rule’. It’s simply good advice to follow as it will lower your perceived risk when banks consider lending to you.
Increase the length of your credit history
Did you know that every time you obtain and begin using a new credit card, that’s considered new credit?
If your goal is to have a high credit score and great credit history (that should be everyone’s goal), then you’ll want to use the same card for as long as possible. If you have multiple credit cards in your wallet, consider keeping them active by using them occasionally. This will allow you to continue to lengthen your credit history.
Limit soft hits and hard hits to your credit
A soft hit (or soft inquiry) will appear on your credit report and only you can see them. They will not negatively impact your credit score.
Examples of a soft hit include:
- Requesting your own credit report
- Businesses asking for your credit report to update their records
A hard hit (or hard inquiry) can have a negative impact on your credit score. Anyone viewing your credit score will see these hits.
Examples of hard hits include:
- Applying for a credit card
- Some rental applications
- Applying for loans
Boost your credit quickly
All the points listed above will ensure you build your credit score steadily over time. They are good pieces of advice to follow that will ensure a positive relationship with credit throughout your life.
If you’re looking to speed the credit building process up, there are also things you can do today that’ll give your credit score a quick boost.
1. Pay off a BIG portion of debt all at once
While this strategy isn’t always possible, if you can pay off a chunk of your credit, do it! The goal is to get below that magic 30% line we mentioned earlier.
2. Accept a credit limit increase
A quick way to get below the 30% of total credit used is to ask for more credit. If you currently have a credit limit of $5000 but you’ve used $2000 worth of that credit, you’re borrowing 40% of your total available credit.
If you request a credit limit increase and your credit card company raises your limit to $10,000, that means that you’ll be using just 20% of your total available credit.
As long as you are disciplined, and don’t use your increased credit limit as an excuse to spend more, this is a worthwhile credit score boosting strategy.
3. Mix your credit
Banks like to see that you can manage different types of credit at once. Different types of credit include:
- A credit card
- An auto loan
- A line of credit
Diversify your credit!
4. Fix mistakes on your credit card
Canadians are allowed to request one credit report per year without incurring a hard hit to their credit score. We suggest you request a yearly report and look for any discrepancies or errors. Fixing those errors could have a considerable effect on your credit score.
For even more help, you can rely on the experts at Legacy Auto Credit! We’re trained to help people get themselves out of bad financial situations so they can begin living a life that’s financially stress-free. If you’re in need of financial advice, start the conversation.
If you need a new vehicle and are looking for an affordable payment plan, our credit experts are ready to help you, even if you have bad credit. You can fill out an online Car Loan Application and our credit experts will help you find a payment plan that meets your budget and lifestyle. You can also reach out for a complimentary credit check.
Written By: Jennifer Livingston
Inspired By: BWS