How Do I Rebuild My Credit?
According to the Bank of Montreal, as of 2015 only 56% of Canadians had ever checked their credit scores. For those of you shaking your head in disbelief, we agree.
That statistic is much too low considering how important this number can be. Making any large life purchases would be rather difficult if your credit score isn’t doing well, don’t you think?
For those just learning, a credit score ranges from 300 to 900. The higher your score is, the better. According to TransUnion (one of the credit bureaus you can collect your score from), a 650 is considered very good.
But what about those of us in the 44% crew who know what our score is, and more importantly, know we need to improve it?
After paying off debt, you may need to rebuild your score from the ground up. There are a few ways to start to build and rebuild credit that don’t require very much work other than good financial management.
- Keeping your credit usage within good range
This means that you should only be utilizing an appropriate amount of your credit. Using over 30% of your limit will affect your credit score.
- Make payments on time and consistently
If you have regular bills going directly onto any line of credit or credit card, ensure you make those payments on time, and if possible, in full. One late payment or delinquency can make a difference in your overall score.
- Ensure all forms of credit are up to date
If this means contacting your bill collectors, banks, or beyond to make sure that they know you are in good standing, go for it! Don’t be afraid to negotiate for reduced interest rates to make payments quicker. The worst they can do is say no.
- Clean up any collections
If you have any past bills or loans that had gone to collections, is it very important you settle these. Once settled, you can request that these are removed from the public records section by the credit bureau.
Overall, your credit score is only going to be as good as your financial health. If you always make your payments, stay within your limits, and take care of any unsecured debts, you should be in wonderful standing. However, that doesn’t mean you don’t need to keep a watchful eye on your credit score.
It is recommended you check your score at least once a year to monitor for any fraudulent activity, and ensure you are staying on top of your monetary game. Good luck!