Canadian Credit Repair Laws

Canadian Credit Repair Laws

Canadians  make all payments on time. You know your credit limits yet your having difficulties moving in to the ultimate good category you want to be in.   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.  The main problem is many of us don't know how our credit score is calculated and therefore have no idea what we’re doing wrong. Payments are such a small ratio of what makes up your credit score. 

  Before trying to improve our score we got to acknowledge all the steps we are taking when it comes to damaging our credit. 

We try to stay away from credit the biggest myth is that credit cards means debt.  Having debt is bad does that mean having a credit card is also?  Not right having little or no credit can be detrimental to your credit score. Main idea of a credit score is to see how you cope with credit.  Bank and lenders have no idea how to deal with you if you have no previous credit history.  A credit card isn't a bad idea having debt is bad. 

 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 stop keeping these cards or often limit our credit.  Canceling the extra card or lowering your credit limit is not a useful strategy to succeed in the credit world.    While these actions may help ease the temptation to spend, they can also hurt your credit score. Here's how: One of the major chunks of your credit score is a "credit utilization ratio" which measured your limit-to-balance ratio on your cards.  As the ratio goes up, your credit score is likely to be negatively affected. Example: Your credit limit is $5,000 and your balance is $500. You credit utilization ratio is 10 percent. If you cut your limit to $2,500 but your balance remains at $500, your ratio would be 20 percent. 

 Strategy: Having a high credit utilization ratio is a bad factor due to the fact it means you are using more of your credit limit. 

 There is only one type of credit.  We have credit cards, and your payments are on time, so you would think your credit is amazing.  Not entirely true.  Dodging different kinds of credits can affect your credit score negativity.  Despite having a credit card and no loans or mortgage could decrease your score.  Having no credit card and taking a school loan can also hurt your score.  The best way to make sure your increasing your credit score   is to keep a diverse amount of credit in your credit portfolio in addition to paying all of your bills on time.

  Strategy:  Keep in mind that adding a mortgage or car loan can actually help your credit score.

We follow all the rumors about good 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. The problem is the total amount of debt that you owe, along with your credit utilization ratio, is a big factor in calculating your credit score. Having debt doesn't just affect your credit score but it could possible come into additional charges that you don't pay 

  Strategy: The less money you owe the better.

 We don’t check on our credit until we want something from it. It’s been a while since you check your credit score.  What's the point; it was fine where you left it?  Then one day you decide to go buy a car or apply for mortgage and you somehow got denied.   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.   Now you’re confused on how to start up again and you're not able to get that house or car you wanted. 

 Strategy: Your credit score can be affected by things outside of it.  Lenders could possibly make a mistake.  Your identity could be stolen with credit opened in your name. Without you acknowledging your credit score can bring you down if not regularly checked.   If you think you'll be applying for a loan or line or credit you should be motoring your credit scores once a year or even monthly.  Consider a credit monitoring service if you want to regularly keep 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

www.ic.gc.ca/eic/site/oca-bc.nsf/eng/h_ca02146.html

Credit Repair by the province of Ontario

http://www.sse.gov.on.ca/mcs/en/Pages/Personal_Finance_Credit_Repair.aspx

The most important piece of the puzzle is making payments on time as all this other advice is helpful.  Timely payments show that you know how to handle your credit without taking on too much debt.

Strategy: A piece of advice, high credit score can be obtained if you have less debt and more credit.

 

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Navtaj Chandhoke
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