Many people in Canada-from your employer to your mortgage lender-determine your financial reputation in the society. Their decision about whether to conduct business with you is largely dependent on the three digits that give a picture of you credit file. It’s almost impossible to escape this scrutiny.
Depending on the extent of damage on your credit, you can turn things around in as few as three months (this period can be shorter if it turns out thremember bad credit rating does not have to be a lifelong sentence, as long as you are ready to apply the following Steps to Repair Bad Credit. at some of the errors on the credit file are not yours after all). Above all, The tactics to use are…
Review Your Performance
What is the state of your credit? You can know this by getting your credit reports from Equifax.ca and TransUnion.ca. As you review the reports, you may want to check and dispute any inaccuracies.
Did you know that as much as 65% of your credit score depends on how you use your credit card and how punctual you are with payments? That’s why you need to strive for a pristine spending and payment habit.
Have A Spending Plan
Talking of spending, I remember getting into the murky waters of bad credit because I ignored my spending plan. It is very important to have a plan (budget) if you committed to re-establishing your credit for mortgage qualification. Most importantly, you need to honor this plan.
While at it, remember to prioritize a savings account even if your debt status is up to the eyeballs. Why is this important? If you don’t have savings, it is very easy to go deeper into debt, especially if an emergency strikes.
Resolve Debt Issues
The scoring system works against any credit card with a debt above 75%. Keeping this debt lower than this will help improve your credit. There is no other way of dealing with debt apart from paying it off. The ideal debt repayment is through a credit card, but I recommend a Debt Management Program (DMP) if the card is no longer affordable. In most cases, Canadians who use this approach are able to clear off their debts in about two years. What I like most about this program is that the debts enlisted here are erased two years after the last payment.
Adopt a Payment Schedule
If you want to sustain good credit to increase your chances of mortgage approval, it is important to make sure you pay on time (as agreed). I have been lucky to work with both people and computers when it comes to crucial payments. While people may entertain excuses, computers may not.
How long to get out of Bad Credit?
A battered credit takes time to re-establish in Canada. You can expect your credit to improve within months. In case you need to apply for mortgage earlier, there are some lenders who are willing to work with you, especially if you bring along a co-signer. Feel free to visit CompareMyRates.ca for more information on how to overcome your bad credit and secure a mortgage in Canada by comparing some of the best mortgage rates and finding Mortgage Brokers who specialize in Bad Credit Mortgages.