What is Credit Rebuilding?
Credit rebuilding is basically the process of turning poor or bad credit into positive or good credit. There is no magic bullet to credit rebuilding. When rebuilding or re-establishing credit, time is your friend.
Why is Credit Rebuilding important?
Credit rebuilding is important because there are hundreds of thousands of Canadians struggling with bad credit every day. When you have bad credit your options for credit become very limited and much more expensive for you, and essentially makes a bad situation worse. By keeping an individual with bad credit in the debt cycle, it becomes very profitable for the company who is lending the money, but very stressful for the individual because they are now having to use a higher percentage of their income to try and service their monthly payments. With good credit, you will pay less for what you borrow, which will increase your monthly cash flow, and allow you access to further credit and the opportunity to build wealth.
There are 3 steps involved with Credit Rebuilding –
- ASSESSING YOUR CURRENT SITUATION
- Obtaining copies of your credit reports from Equifax and Transunion
- Reviewing these credit reports
- Correcting any items reporting incorrectly
- Settling any outstanding debts on your reports
- REBUILDING CREDIT
- Apply for new credit you know you will be approved for
- Obtain different types of new credit
- Use the new credit wisely and pay on time
- Always keep your balances below 30% of credit issued
- Do NOT go over your credit limit
- Check your credit reports at least once per year
- PROTECTING YOUR CREDIT RATING
- Never co-sign unless you can pay the debt yourself
- If turned down for a loan do NOT apply for others
- Try to keep all negative remarks off of your credit reports
- Be careful of fraud and who you give your personal information to
- Learn to maintain a household budget
- Do NOT write NSF cheques
If you want to know more about how 4 Pillars can help, contact your 4 Pillars office in Kitchener.
