How to Address Bad or No Credit
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The best solution to a bad credit rating is prevention by following a few simple steps like living within your means, following a realistic budget and paying your bills on time.
If you have a low or no credit rating it can affect you because it is used by lenders, insurers, landlords, employers and utility companies to evaluate your credit behaviour and assess your creditworthiness.
When you apply for rental housing, the landlord may assess your tenant worthiness and their risk by factoring in your credit rating and score. The landlord may refuse your application in favour of someone with a better credit rating.
If you have a bad or no credit rating, there are steps you can take to establish or re-establish it.
Get a copy of your credit report
Free credit reports are available from the two credit reporting agencies in Canada, Equifax and TransUnion. Complete the form and mail it to the appropriate company along with the specified photocopied identification and the report will be sent to you.
Open a secured credit card account
If you have no credit history, or need to rebuild your credit, open a secured credit card account. You pay a deposit, which sets the limit of your card, then use it like a regular credit card. The secured credit card provider reports your payment habits to the credit bureau(s), so you will be able to gain points with an account in good standing.
Pay your bills on time
Making payment, even one day late, will hurt your credit score. Make your payment at the bank, online or by mail several days before it’s due to allow enough time for the transaction to be processed.
Never exceed your credit limit
If you have a credit card, going even $5 over your limit could lead to a costly fee from your credit card company and will hurt your score each month it happens.
Spread out your spending
By using a realistic budget, you can spread out your monthly spending so you won’t be caught without funds at the end of the month.
Using your credit wisely
The biggest “tip” to having a good credit rating and a high credit score is to continually use credit and to repay that credit on time, every time.