Finances

How to fix bad credit in Canada: a complete guide

It is not good to have a poor credit score. But don't worry. You can fix it! Read this post and you'll learn how to fix your score in Canada.

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Fix your bad credit: with a little planning and discipline, you can build a good credit score.

fix bad credit Canada
Learn how to fix bad credit in Canada. Source: Adobe Stock.

To have a healthy financial life, it might be useful to learn how to fix bad credit in Canada. Even if your credit score does not represent you in your whole complexity, it is socially important. And as we don’t live isolated in caves, but inside a social and economic system, it is healthier to keep up with some standards. 

Of course, you can say that you don’t care about this and play the game in your own way. But how will you get a mortgage to buy a good house for your family? Or even get a personal loan to fix some emergency, like a home repair. And let’s not forget about the good things, like a wedding party with a delightful honeymoon.

Can you pay for all these things in cash without any assistance from credit institutions? Great! But it is risky to keep a low credit score on purpose, just because you didn’t care about it. 

On the other hand, if you care about your credit score, but it is not that good right now, there is no need to despair or give up. There is a clear path to rebuilding credit in Canada, and it is not that hard. All you need is a little effort and discipline.

If you’d like to keep a healthy credit score, we have some tips for you. To learn this valuable information, keep reading this post, and we’ll tell you how to fix your bad credit in Canada.

How long does it take to rebuild credit in Canada?

rebuild credit
With these tips, you will rebuild your score. Source: Adobe Stock.

Your credit score will not go down overnight. It will take a few mistakes that accumulate to lower your score. And to rebuild it will not be that quick too. 

But maybe it takes less than you think it will. If you keep good use of your credit lines, you can reestablish your credit score within six months. However, it is just an average, and it can take longer depending on your score and the credit you have available to rebuild it.

In fact, in three months, you can build a good score that will already give you access to better credit cards and loans. So keep reading to learn how to fix bad credit in Canada.

Learn to fix bad credit in Canada ASAP: 5 tips for rebuilding credit.

A good credit score is at least 700, and an excellent one is above 750. If you got to a 650, it is considered a fair credit score, and you can already access some better offers, but not the best ones. But if it is under 600, it is a poor credit score and it will be very difficult to access credit lines. 

Follow these tips the best way possible. It will not be a fast run. It’s more like a marathon. So take a deep breath, make a good plan and stick to it. This is how you fix bad credit in Canada. 

Review you score

The first thing you should do is ask for a copy of your credit report and review it. You can ask for this report at no cost one time a year to the credit bureaus (TransUnion and Equifax). Check if there are debts you already paid and were not taken off your reports, late payments that were not late, etc. If you find something wrong with your reports, ask your credit issuer to fix it. Also, look for negative information that is older than 6 or 7 years old. They shouldn’t be on your reports anymore.

Pay your debts

This is the big step that will solve most of your problems with your credit score. Debts drastically lower your credit score. Contact the companies with which you have any debt to make a deal. Sometimes just the arrangement will already get it out of your report and help you to rebuild credit in Canada. However, if you miss a payment, it will damage your score again. You can look for small loans to pay off your debts and pay the loan always on time. This will improve your credit score.

Get a secured credit card

To rebuild credit you’ll need a credit line. However, credit card issuers do not have good card offers for people with a bad score. The best option is to get a secured credit card. Make an effort to pay the security deposit – some cards allow a deposit as low as $100. 

Plan your budget

Now that you already checked your credit report and have a secured credit card, the next step is to plan your finances to make good use of your income. Track your expenses to find the gaps in your budget and avoid running out of money for the important things. 

Keep a low ratio between credit limit and credit usage

canadian card
Use your credit card strategically. Source: Adobe Stock.

This is pure strategy to fix your credit score in Canada. As soon as you get your credit score, use only 30% of your credit limit. A good way to do it is to pay your card bill every time you make a purchase on it. It will prevent you from overspending and keep your usage low. You can use the revolving credit for the whole month without reaching the top limit.

And if you want some tips on how to safely invest your money, we’ve got you. Follow the link below for some low-risk investment tips.

canadian money

Safe investments in Canada

Learn the best low-risk options of Canadian investments and make your money work for you!

About the author  /  Aline Barbosa

Aline Barbosa is an editor, writer and learning-enthusiast. Passionate about music, books and human behavior. Curious about the unknown. Believer that learning is a life-long process.

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