How Do I Fix My Credit?
Good for you! You have just accomplished the first step in rebuilding your credit; acknowledging that your credit is in need of repair. If you follow the steps in this article and learn what to do next you can have great credit once again.
Step one: Get a copy of your credit bureau and ensure accuracy.
Get a copy of your personal credit report and make sure that all of the information on the report is correct. In Canada, there are two major credit bureaus that are recognized by most lenders. To give yourself the best possible chance to obtain new credit, it is imperative to insure that you are represented properly on these bureaus. To view your personal report, click on www.equifax.ca or http://www.transunion.ca. Now that you have reviewed your credit bureau, notify the credit bureau agency of any errors on the report. Your personal credit score (beacon score) is vital in determining what type of auto loan program you will qualify for. With a credit score over 630, there is a good chance you will qualify for mainstream financing. Scores below 630 usually indicate a need for alternative finance sources.
Step two: Work with your current creditors to improve your rating where possible.
Question your creditors about the opportunity of improving the rating they have assigned to you on your credit bureau. You may have had an account written off on your bureau and have since repaid your debt with that particular lender. Speak with that lender and see if they would be willing to improve the rating they have given you. They may not be willing to completely remove the bad rating, but they may be willing to offer you a “reduced sentence”. This may not mean that you will instantly qualify for regular finance rates, but it will have a significant impact on the rate provided to you by an car loan provider. Changing just one account rating on your credit bureau may have a significant impact on the type of auto loan that you will qualify for.
Step three: Put together a plan to deal with your outstanding payments.
Remember this: if you have payments past due and your creditors cannot reach you, they will assume that you are not going to be paying the balances and they will rate your account as such. Be proactive in dealing with your creditors. They may be willing to work out a payment plan to deal with your outstanding or past-due payments. If your creditors see that you are interested in dealing with your debt, they will be less likely to judge you harshly on your credit bureau.
Step four: Improve your credit score with a new car loan.
Now is the time to start rehabilitating your credit. A new car loan is a great way to rebuild your credit. Several bad credit lenders have programs that will allow you to refinance as early as 10 months from the start of your loan. Just pay your loan on time for a 10 period and you may be eligible to refinance you loan with a newer vehicle. Make sure you are dealing with a dealer that wants to deal with you long term. Talk to your dealer representative about refinance programs and ask if they have a strategy that will help you eventually get into a brand new car at factory rates!
Step five: Pay your accounts on time and as agreed.
Now that you have taken delivery of a new or used vehicle with a bad credit car loan, make sure that you make all of your monthly payments as agreed. Speak to your special finance manager about setting up a payment schedule that works for you. If you are paid every two weeks, have your loan payments set up to sync with your pay. Your loan payment will be withdrawn from your account just as your pay is deposited; you won’t even know it’s gone!
Step six: Protect your credit; it’s yours for life!
Be very selective about taking on new credit going forward. Remember the traps you fell into before and avoid them. Keep in mind that credit companies profit from your outstanding balances. Keep your credit card balances low and show your creditors that you can be responsible with your credit. Before you know it you will have rebuilt your credit, truly one of the most rewarding achievements of your life!