If you are suffering the results of bad past decisions, or have recently been discharged from Bankruptcy and are looking to restart your credit history there a few ways to get things moving. However, it is a slow process which builds momentum over time. The most common methods people use to restore their credit include the following:
- Secured Credit Cards – DO NOT CONFUSE WITH PREPAID CREDIT CARDS – This is where a Credit Card Company requires a cash deposit in the range of $500 – $1,000, and issues a Credit Card with a corresponding credit limit.. This is a real Credit Card where the holder uses it and receives monthly statements which they are required to pay in normal course. As the holder pays their monthly statements a payment history starts to grow at the credit bureaus, thus improving the holder’s credit history over time. However, if the holder neglects to pay the monthly statements the Credit Card Company cancels the Credit Card and pays off the balance with the cash deposit and reports this negative behavior with the credit bureaus. This is not something you want to happen when you are trying to rebuild your credit.
- Obtain a Co-Signer – This is where an individual has a family member or close friend co-sign for a low limit credit card or loan. The individual then starts to rebuild their credit history over time through responsible use of the credit card and / or repayment of the loan.
- Current Loan – If you have a current loan that you have been faithfully keeping the payments up to date, these payments are being reported to the credit bureaus. Accordingly, this is resulting in a positive impact on your credit rating and will help future credit providers in determining your credit worthiness.
Regardless of the method used to rebuild one’s credit, one must realize that it is a slow process where lenders will often subject a person to higher than normal interest rates and service charges due to the risk associated with the person prior credit history. However, over time a person’s credit rating can be restored.
The options discussed are not exhaustive and there may be other options available that may be unique to your specific situation. However we hope the information discussed has given you some insight into a few options available in restoring your credit rating and how they may affect you. We at Allan Marshall & Associates Inc. are always available free of charge to discuss any matters dealing with your credit and debt. Please visit us at www.wecanhelp.ca or don’t hesitate to call us at 1-888-371-8900.