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How to restore your credit rating

First check your credit score. If you have been a victim of Identity theft this can be a real nightmare. You can obtain your credit report for free from the two reporting agencies, Equifax Canada and Transunion. You can either go online and order one or call them and ask them to send you a free report.

It is important to check your credit report for any mistakes, mistakes can happen and cause your score to be misreported. If you have had collections in the past and have paid them make sure that has been reported as well although once you have paid, it will remain on your report. The lending institutes like to see that you have paid and this can weigh in on their decision.

Correct an errors

If you do find any errors., you need to complete a form to get them corrected, and there are instructions as to how to do this on both reporting websites.

You mist first report the error to the agencies and then it is always wise to speak to the financial company as ultimately it is up to them to correct the mistake. You can always ask for them to send you a letter stating the error and you should keep this on file and check to make sure it has been done.

The best way to start rebuilding your credit is to ensure you pay your credit cards and utility bills on time. If there is a delinquency reporting on your credit the best fix for this is paying on time and time itself. The further along you go with no more delinquencies the better.

If you do skip a payment, get in touch with your financial institution and request that they take any late fees off your account, as these show up as a blemish on your report.

If you can't actually get any more credit, it can be hard to build your rating back up.

Secure Credit Card

In the cases where your credit report has been impacted such as bankruptcy, a consumer proposal or a voluntary debt repayment program - you may apply for a secure credit card with a financial institution. This will help build your credit back up.

This means depositing a lump sum of money which the financial institution uses as security against you not paying your debt. By using the secured card and paying it off in full each month, you will gradually see an improvement in your rating.

Stop making credit mistakes

Try not to you carry too high a balance on your credit card; the Financial Consumer Agency of Canada recommends keeping a maximum balance between 35-50 per cent of your credit limit.

Also try not to have too many credit or store cards, even if you don't use them and carry a zero balance on them; they give you the potential to get in a real mess and lenders can see that.

Do not cancel all your credit cards at once leave a couple of weeks between closing accounts to be safe. You should also limit the amount of credit you apply for, as every time you apply for a new source, your credit rating takes a hit. If you are shopping for a car loan pick a company like credithelpfinancial.com and allow us to exhaust securing a loan so it limits the impact on your score.

Check your credit rating annually and maintain an excellent history of paying bills on time.