Credit Repair Canada, We make all payments on time. You know your credit limits yet youâ€™re having difficulties moving in to the ultimate good category you want to be in.Â Â What are you doing wrong to damage your credit?There are so many misconceptions about credit that we often don’t realize how easy it is to damage our credit score.Â One of main concerns of credit score is that we don’t know what we are doing to end up in the situation we are in.Â Paying your bills on time is only a fraction of what makes up your credit score.
Â Before trying to improve our score we got to acknowledge all the steps we are taking when it comes to damaging our credit.
We avoid credit. There is a misconception that having a credit card means you will be in debt.Â Debt is bad, so credit cards must be bad too, right? Incorrect having a small amount of credit or no credit can be damaging to your credit score. Main idea of a credit score is to see how you cope with credit.Â If you donâ€™t have credit history, lenders and banks have no way of knowing if you can deal with debt. Debt is bad, but credit cards are not when used responsibly.
Â Strategy: Taking precautions on your spending to a small amount of your credit limit and making payments monthly can help out on building a firm credit score.
We remove the cards or lower our limit. If you think lowering your credit limit or canceling that extra credit card is a good idea, think twice. While these actions withhold your spending urges they could also damage your credit score. Here’s how: One of the main factors of your credit score is your “credit utilization ratio,” which measures your limit-to-balance ratio on your credit cards. If the ratio rises, your credit score could possibly be negatively affected.Â Â Letâ€™s pretend your credit limit is $5,000 and your balance is $500.Â The credit utilization ratio would be 10%. If you cut your credit limit to $2,500, but your balance remains $500, your ratio is now 20 percent.
Â Strategy: The higher your credit utilization ratio the more negative impact it is considered to have because it means you are spending more of your credit limit.
We only have one type of credit. You have credit cards, and you pay your bills on time, so your credit must be pretty close to perfect, right? Not entirely true.Â Avoiding different kinds of credit can also hurt your credit score. If you don’t have any loans or mortgage your score can be low.Â Having no credit card and taking a school loan can also hurt your score.Â The best way to make sure your increasing your credit scoreÂ Â is to keep different types of credit in your credit portfolio in addition to making payments on time.
Â Strategy: Investing in a car loan or a mortgage can help your credit score.
Â We listen to myths about â€œgoodâ€ debt. One of the worst misconceptions about credit is the myth that holding on to a little bit of debt can actually help your credit score. With the total amount of debt you owe, alongside with your credit utilization ratio it’s a big factor when calculating your credit score.Â Having debt doesn’t just affect your credit score but it could possible come into additional charges that you don’t pay
Â Â Strategy: The greater the advantage when you owe less.
We donâ€™t check on our credit until we want something from it. Say itâ€™s been a couple years since you checked your credit score. After all, it was fine where you left it, right? Later you go to buy a car or apply for a mortgage and discover youâ€™ve been denied because of your credit score. It’s only then that you learn your identify was stolen and somehow someone opened up credit cards underneath your name destroying everything you’ve built with your credit.Â Â Now youâ€™re confused on how to start up again and you’re not able to get that house or car you wanted.
Â Â Strategy: Your credit score can be affected by things outside of it.Â Lenders could possibly make a mistake.Â Your identity could be stolen with credit opened in your name. If youâ€™re not regularly monitoring your credit score, these mishaps can drag down your score unbeknownst to you. It’s a good idea to check your scores at least once a year or a few months before you think you might apply for a loan or line of credit. You could potentially get a credit monitoring service if you want to instant tabs on your credit.
There are two very important websites where Canadians can learn more.
Credit Reports, Credit Scores and Credit Repair by Federal Government of Canada
Credit Repair by the province of Ontario
Â Â A main key is to make your payments no time as all this can help raise your credit score.Â Being punctual with your payments can show you can handle your credit without taking too much debt.
Strategy: Remember the golden rule of obtaining a high credit score: less debt, more credit.
Your Rights When Dealing With Credit Repairers
Â Itâ€™s illegal for credit repairers to accept advance payment, security for payment or to charge a fee unless their services cause a material improvement to the consumerâ€™s credit file. For example, if an amount owed by one consumer appeared on the wrong personâ€™s credit file, a correction of that information achieved through the efforts of the credit repair company would be a material improvement.
Itâ€™s illegal for a credit repairer to represent that they can cause a material improvement to a consumerâ€™s credit file before examining the consumerâ€™s consumer report.
Consumers have a 10-day cooling-off period, which begins from the time they receive a copy of the agreement that meets the requirements of the act. If the company fails to repay the money, the consumer can take the company to court.
Credit repairers must provide the consumer with a written, dated contract.
Itâ€™s illegal for credit repairers to make false or misleading claims. In reality, no credit repairer has the power to change or erase accurate information in a consumerâ€™s file.
Your success is our Passion!