When it comes to bruised credit, banks will often say sorry, but “pay your bills on time and come back in 6 months”.
This is not particularly helpful advice and often leads to refusal again in 6 months. There are many factors involved in a person’s credit score and paying your bills on time is just 1 part. Thats why working with the right professional is so important.
Errors and false information – Bad reporting, fraud and lazy banks can wreck havoc on your score. The first step is to get a copy of your credit bureau so you can determine if the information stored there is true or false. The second step is to gather documents that support your side of the story, if false information is found. The third step is to contact a member of the credit bureau like our team to dispute the false information. The lender will have 30 days to provide evidence the information is correct. Don’t let bad information stop you from getting into your own home!
Collections – There is no easy way to deal with collections except to pay them. The reason they are there is because the lender lost touch with you or you disagreed with a bill. No matter HOW righteous your cause, unless you pay, only time will remove them. BUT, here is something you can do. You can negotiate with the collections agency for “paid in full”. The collection agency wants to be paid, so sometimes they are willing to accept less than the full amount owing, for money now. Make sure they are willing to put “paid in full” on the account.
Late or missed Payments – Late or missed payments represent times that you did not have the funds to make a payment or you neglected the date the minimum payment was due. This represents PAST habits right? Before you borrow, ensure you have the funds to make the payments and preferably… pay the balance in full. Get acquainted with when the debt is due and make that payment early!!! Some cards allow a minimum payment to be debited automatically from your bank account so use that to make sure you are never late again.
Action Plan – Lets increase that score
Tradelines – A person needs at least 2 active trade lines to accelerate the increase of your credit score. Trade lines can be credit cards, lines of credit, loans, car leases etc. Most mortgages do not show up on your credit bureau and thus mortgage payments do not increase your score! Secured cards are a great way to start if your credit is “0” or you have a “reject beacon”.
Use the cards – You must borrow to create a history of your habits of repaying debt. A computer marks the card used or unused, paid or unpaid… so a $1 gum purchase is the same as a $1000 computer, except the $1 debt is easy to payoff. Use your cards every 2 months to show your good habits of repaying debt.
Credit Checks - While rebuilding credit, it is not a good idea to allow multiple credit checks. Think twice about allowing someone to credit check you because it will lower your score.
Obtain at least 2 credit cards with a total $2500 max limit sum between them. - Under $2500, the lender may not take the credit card activity seriously. Consider credit cards at a store you don’t shop at, or a gas card if you are worried about over spending.
Don’t max out your credit cards …stay below 30% of card limit for the best score and below 50% for next best score. High balances lower your score.
For specific help and more, contact me at steve.bucher@migroup.ca
Best Regards
Steve
