How To Start Rebuilding Your Credit
There is no magic formula that allows you to rebuild your credit instantly. You cannot pay to improve your credit rating. Here are some of the ways that you can start rebuilding your credit.
What are the good credit practices?
The only way to rebuild your credit is by following good credit practices. In order to understand what are considered “good credit practices,” you’ll need to understand a bit about how credit ratings are calculated. One of the most important aspects of a credit report is how often you pay your bills on time. This makes sense. Lenders want to see that you have a proven history of on-time bill payments before they are willing to lend you money.
Therefore, in order to rebuild your credit rating, you will need to show that you can pay your bills on time. One way to do this is with a secured credit card.
You may find it difficult to get a loan or a credit card once you have completed a proposal or bankruptcy. However, with a secured credit card, you put down a deposit that is held by the lender for as long as you have the card. This deposit becomes your credit limit on the card. For example, if you put down a $500 deposit, you will have a card with a $500 limit. Using this card and paying your bills on time can help you with rebuild your credit.
Keep in mind that a secured credit card is different from a prepaid card. A prepaid card is similar to a gift card. Once the money on the card is used up, the card is empty. There are no monthly bills to pay and, therefore, using one of these cards does not help with rebuilding credit.
If you’re looking for a credit counsellor in Toronto, get a quick assessment with us today or call us at 416.900.2324. We will help you develop a plan, reduce your interest costs and get out of debt over time.