How do you fix a bad credit rating?

[chris lindberg]

How do you go about improving your credit rating?

I believe there are a few outstanding bills with my name on it, 10 year old city phone bill, Columbia House CD's, Cable bill and my spouse has a old rental charge from 4 years ago along with an outstanding cable bill.

We have lived common law for many years, so in order to clear my credit rating, would we have to settle all of our outstanding debts?
I was once refused credit because of my Mother's bad credit rating I believe.

I plan on opening a business in a year or so and I would think that having a good credit rating would be ideal, I have never owned a credit card yet but I've been thinking about getting one just to use it to sell items on EBay?

Is there a place to call where they will find all your past debts and you make one payment per month with a little money going to all your outstanding debts?

Thanks CP!

[HelloHockeyFans]

I believe time, and the paying off of pretty much all your debts is the only way to fix bad credit.

[Nikki]

http://www.equifax.com/EFX_Canada/co...nreport_e.html

I would order a copy of your credit report and once you receive it, go through it and contact the companies you owe money to and make repayment arrangements.

Good luck, it can be a long and tedious experience!

[ken0042]

Originally Posted by chris lindberg

Is there a place to call where they will find all your past debts and you make one payment per month with a little money going to all your outstanding debts?

http://www.creditcounselling.com/

The bottom line as I understand it is this:

- Companies only have 2 years to collect debt from you. That is 2 years from the last date you acknowledge the debt.
- Bad credit will stay on your account for 7 years. If you have 4 year old bad debt, and decide to pay it off, that black mark will stay on for 7 more years.

Get yourself a secured credit card, and keep your nose clean until it all drops off your record. That's what I did.

[Sylvanfan]

Fake your death and recreate yourself with a new identity. Works every time for me.

[MJK]

Pay off your debts and get a CC, even if you have to pay a monthly fee. Just pay off all your monthly minimum payments on that and have the other stuff cleaered up and you will eventually get back on the right track.

[metal_geek]

Originally Posted by ken0042

http://www.creditcounselling.com/

The bottom line as I understand it is this:

- Companies only have 2 years to collect debt from you. That is 2 years from the last date you acknowledge the debt.
- Bad credit will stay on your account for 7 years. If you have 4 year old bad debt, and decide to pay it off, that black mark will stay on for 7 more years.

Get yourself a secured credit card, and keep your nose clean until it all drops off your record. That's what I did.

That is EXCATLY right.. there is a time when paying off your old debts is worse then NOT... an R9 with a ($0) balance is the same number of points as as an R9($10,000) balance...

you make a payment or contact them about the debt and it's gonna reset the 7 year counter.


The best way to repair your credit.. and it takes a while... is to get a secured credit card, and or finance a car through one of the we take bad credit people... it costs you money.. but it's the cost of doing business in the credit world.
________
Uhwh warehouse

[Stillman16]

Another way that might help, and cost you less, is to go to the bank to get an RRSP loan, and pay it in the installments.

The theory is, the bank has no risk, as they can use the RRSP as colateral, and you get to show you are responsible while saving for retirement.

Also, if you are starting a business, you can also use that RRSP like the home buyers plan, to finance it, and pay it back over time.

[Prototype]

Originally Posted by Sylvanfan

Fake your death and recreate yourself with a new identity. Works every time for me.

Thanks Cheese... I mean... Syl... Oops...

Time and payments. I wouldn't reccomend wiping out all your credit, but maybe consolidating it into one payment. Make those payments on time.

If you wipe it all out, there's no history to report, hense nothing to build on.

If you do have anything outstanding as far as collections or anything like that goes, take care of those first. Make your payments on time when it comes to the other credit you've used, pay your bills, and wait.

A lot of times, your credit will go up about 2 points in the matter of about 4 months with not the best management. Other times just getting back in the habbit will work wonders on your credit scoring.

[Vulcan]

Originally Posted by ken0042

http://www.creditcounselling.com/

The bottom line as I understand it is this:

- Companies only have 2 years to collect debt from you. That is 2 years from the last date you acknowledge the debt.
- Bad credit will stay on your account for 7 years. If you have 4 year old bad debt, and decide to pay it off, that black mark will stay on for 7 more years.

Get yourself a secured credit card, and keep your nose clean until it all drops off your record. That's what I did.

Listen to Ken. He's got it right.
The only rider is, I think you have to pay off any student loans, but check it out with a counselor.

[Finner]

In terms of credit...

I am a student. I have missed minimum payments on my Visa maybe twice, and was late for a phone bill once. I have about $3000 on my credit card, that i do make the payments on now. I only have about 2 years of credit history as i'm only 20.

Are these two or three missed or late payments going to hurt me much? Or is that stuff pretty minor in regards to my credit rating?

[mrdeeds]

Originally Posted by Finner

In terms of credit...

I am a student. I have missed minimum payments on my Visa maybe twice, and was late for a phone bill once. I have about $3000 on my credit card, that i do make the payments on now. I only have about 2 years of credit history as i'm only 20.

Are these two or three missed or late payments going to hurt me much? Or is that stuff pretty minor in regards to my credit rating?

It will if you do not have much other credit. I would be more diligent in your payments and it should be ok. For some reason, credit granters seem to give students a break

[Resolute 14]

Of course they do. Students who rack up the CC bills pay a lot of interest. Cutting them off early cuts off that income.

[RougeUnderoos]

nah.

[albertGQ]

Originally Posted by Stillman16

Another way that might help, and cost you less, is to go to the bank to get an RRSP loan, and pay it in the installments.

The theory is, the bank has no risk, as they can use the RRSP as colateral, and you get to show you are responsible while saving for retirement.

Also, if you are starting a business, you can also use that RRSP like the home buyers plan, to finance it, and pay it back over time.

This is actually false. Banks can never take your RSPs as security. It must be registered in your name only. The banks like to make you think that your RSP loans are secured by the RSPs you buy when in fact you don't even have to purchase RSPs with them. In fact, you can even use that loan and invest elsewhere. The way they "force" you to invest with them is that if you don't, you won't qualify for the prefered rate (usually prime minus one). When I worked at ATB, I used to tell people that wanted to buy stocks with the RSP/Investment loan to just get the loan at prime minus one. Put it into a cashable GIC, and then redeem it and invest into whatever they wanted

[chris lindberg]

Thanks for all the advice CP, but no one has yet answered me on how credit affects a couple, will she have to clear up on her past debts if I want a good credit rating? (not to say she doesn't want a good credit rating herself)

[urban1]

You are giving incorrect information.

An RSP loan will have the proceeds contributed to the RSP. The brokerage will also not let you purchase high risk securities with the loan. The loan is secure in an indirect sense in that the assets you purchase are sitting in an account at the broker. You would not be able to transfer out the account without settling the loan.

You are mixing stuff up in what you say Tell me where I can purchase an RSP? If I buy an RSP, what do I buy?

(One last thing... with a brokerage, they wont run a credit check on you for an RSP loan. They lend you the money, force you to contribute it and then purchase a security. They make money on the loan and on the trades you make with the proceeds of the loan. An RSP loan is different from an investment loan at a bank.)

Originally Posted by albertGQ

This is actually false. Banks can never take your RSPs as security. It must be registered in your name only. The banks like to make you think that your RSP loans are secured by the RSPs you buy when in fact you don't even have to purchase RSPs with them. In fact, you can even use that loan and invest elsewhere. The way they "force" you to invest with them is that if you don't, you won't qualify for the prefered rate (usually prime minus one). When I worked at ATB, I used to tell people that wanted to buy stocks with the RSP/Investment loan to just get the loan at prime minus one. Put it into a cashable GIC, and then redeem it and invest into whatever they wanted

[urban1]

Back to the origial topic:

Order a free credit report from Equifax and Transunion. Google them and make sure you go to their Canadian websites. It will take a week or two to get your credit report. You can order it by phone or by mail.

Then go to a credit counsellor. As previous posters have mentioned, sometimes old debts are best left behind because even any contact with the creditor can reset the clock on the debt whereas otherwise it would have been dropped off your report if sufficient time has passed. A credit counsellors services can be obtained for NO cost.

[Fobby]

Missing a creditcard payment doesn't dent your credit ratings that much because the CC company charges what... 18% of interests.. but if you miss a mortgage/car payment.. big uh oh..

This is what the bank told me when they "forgot" to take out my final car payment. I am still waiting for them to fix my credit rating.. stupid bank... grr..

[albertGQ]

Originally Posted by urban1

You are giving incorrect information.

An RSP loan will have the proceeds contributed to the RSP. The brokerage will also not let you purchase high risk securities with the loan. The loan is secure in an indirect sense in that the assets you purchase are sitting in an account at the broker. You would not be able to transfer out the account without settling the loan.

You are mixing stuff up in what you say Tell me where I can purchase an RSP? If I buy an RSP, what do I buy?

(One last thing... with a brokerage, they wont run a credit check on you for an RSP loan. They lend you the money, force you to contribute it and then purchase a security. They make money on the loan and on the trades you make with the proceeds of the loan. An RSP loan is different from an investment loan at a bank.)

No I'm not. RSP loans don't even have to be used to purchase RSPs. I was doing that for 5 years. I know what i'm talking about. Maybe the other banks are different, but where I worked, they could do whatever they wanted with it