You missed some payments on your credit cards. You have received nasty phone calls from collection agencies. You are almost sure that your credit score has dropped.
Fear not, there are ways to start lifting it.
Your credit score is based on your credit history and this is what lenders use to determine the likelihood of you paying off your loans. The higher your score, the better.
According to AndrÃ© Bolduc of BDO Debt Management Solutions, the first step to regaining control of your credit score is to get your credit reports, even if you fear they are ugly. You can order them from credit reporting agencies like Equifax and TransUnion, or in some cases from your bank.
Find the accounts on the report that were sent to collection agencies and pay them first. If you just can’t, you can try what is called a consumer proposal, which is a written offer to your creditors to only pay them a portion of what is owed to them. Insolvency trustees can help with drafting and negotiations with creditors.
Surprisingly, says Bolduc, declaring bankruptcy or having a consumer proposal on file is unlikely to have much of an impact on your credit score.
âBy then, the damage is already done,â Bolduc said. âIf anything, bankruptcy or a consumer proposal draws a line in the sand. This prevents creditors from saying month after month: âyou are a delinquent, you are a delinquentâ. “
If you start to rebuild your credit score after filing for bankruptcy or a proposal, Bolduc recommends trying to get two credit cards, with low limits, say $ 2,500 each. But only use them a little.
âNever use more than 30% of your room. And pay it back in full every month. … Your score will immediately start to increase. If you do this for two years, you’ll be up there.
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