How long does it take to fix bad credit in Canada
Although Canada has a lot of consumer protections in place there still are people out there twisting the truth about credit, how it works and how you can profit or recover from it in record time. When it comes to credit repair the first thing to understand is Equifax does not belong to the government nor does Transunion these are private companies that have their own methods of calculating your credit score. Yes it’s true Equifax is more commonly used than Transunion but this does not mean that Transunion isn’t important as well.
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What is almost as bad as Bankruptcy on your credit report?
I’m in no way shape or form promoting or endorsing bankruptcy here but there are some people that think defaulting on a loan and having it go into collections is not that big a deal. When it comes to Equifax and your credit score it is a big deal and in many cases it will be the collection item on your credit file dragging your credit score down. If you have a bunch of items in collections; the reality is on your credit file you will be viewed similar to a person that’s gone bankrupt or in a consumer proposal. Again Equifax is not the government it’s part of the private sector when a person declares bankruptcy or goes into a consumer proposal the reality is their putting their financial burdens on the Canadian tax payers!
When a person allows a loan, a phone bill, credit card bill, cable bill etc. to go into collection this is still a private sector problem however the private sector handles this problem by reporting and giving that individual a wound on their credit file that can last up to 6+ years, which is very similar to a bankruptcy which stays on a persons credit file for 7 years. Also in the event of a consumer proposal this can remain on a persons credit file for 8+ years depending on the length of time a person chooses to pay it all back!
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How you fix your credit file in Canada
Pay your bills on time starting today if you have any items in collections pay them off and inform Equifax and Transunion that you paid these debts off immediately so those negative items can be removed as soon as possible from your credit file. If you’re in a consumer proposal pay that off as soon as possible and get discharged. You also want to apply for a secured credit card as soon as possible and pay that bill on time every single month so you can rebuild your credit history. It’s my advice that anyone reading this should stay away from INSTALLMENT loans.
The only installment loan qualified individuals should sign up for are mortgages! An installment loan is a car loan or personal loan that obligates an individual to pay a set amount of money per month/week/or bi-weekly for a specified length time like 1 – 5 years. A credit card is a revolving loan and the amount you pay depends on the interest rate and the amount borrowed an installment loan is a lot like signing a lease or a mortgage and these loans are usually the loans that cause people the most financial hardships which is probably the reason most of you are reading this blog post today so avoid them by all costs their actually worse than credit cards in my opinion because you’re obligated to pay a set amount and this can and will limit your flexibility especially if you lose your job or something unexpected happens.
Credit card companies are usually fighting for your business and because they have lower minimum payments be month if you’re smart with your money credit cards can be the better option in times of financial emergencies! Again to raise your credit scores always pay the minimum balances, so if you like using debt use the debt instruments that have the lowest minimum payment!
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