How to Re-Establish Your Credit Score For Free
November 27, 2024 | Posted by: Sherry Corbitt
Do not worry if you have low credit and need to bring it back up, whether for a loan or mortgage. Although regaining yourself from low credit, there are many steps to do to re-establish it. There are also many options which will not cost you money.
Identify Why Your Credit is Low
The first thing you need to do is to sit down and evaluate your credit situation. You cannot fix your credit until you know what has and is causing it to be so low. Many things can cause your credit to remain low, whether from current or past credit problems. Some things can include unpaid debts or payments, high credit card balances, and bankruptcy. If you are still unsure of what is causing you to experience a low credit score, speak with a financial professional to discuss your situation.
Pay Off Your Debts
Something that could be holding your credit down is your unpaid debts. The longer you’ve had them, the lower it will bring your credit down. Once you confirm all your debts, evaluate which ones you can pay off. Realistically, you will not be able to pay them all off at once. Yet if you focus on paying off the older ones, you can eliminate the possibility of having to pay more with interest. As well, try and pay off larger ones. This will ensure that you slowly lower the amount, which will, in turn, start bringing your credit up.
Pay Off Late Payments
Do you have any payments that you are late with? This can include paying your rent, house costs, or appliances? If so, you will want to pay these off as soon as possible. However, depending on what type of payment you have not paid off, you may receive interest added to your costs. From this, you will have to pay more over time, which will continue to lower your credit score. To avoid this from happening, make a checklist of your payments that need to be paid off.
Update your Credit Report
Most of your credit information will be on your credit report. Once you have paid off all debts or payments, you will want to speak with your financial representative. You will want to remove all your old credit, including all the debts and payments you have paid off. Once you show that you have paid these all off, you can have your credit report updated, removing those old records. It may take a bit of time for your updated credit report to come in, yet once it does, you can be sure that it will surely lower your credit.
Remove Unused Bank Accounts
It can be easy to apply for various bank accounts. Yet, depending on how many you have, it could affect your credit score and lower it. If you happen to have a few bank accounts, consider which ones you rarely use. Then, move any money from these accounts to your primary tabs. After this, you can freely remove them. Then, go to the bank to ensure that these accounts have been removed. After some time, you may notice your credit score increase.
Past Bankruptcy
If you have ever declared bankruptcy, no matter how long ago in the past it was, it can bring your credit down. The history of this bankruptcy will sit with your credit and may be the reason why your credit is low. To ensure that this is not bringing it down, visit the Ontario Archives for your bankruptcy documentation. The good thing to note is that most bankruptcies are removed from your credit report after ten years. So unless you had a particular bankruptcy situation, you should not worry.
Although it may take a while to re-establish your credit score, it will be worth it. Not only will you save yourself much money using these tips, but you also can re-establish your credit score in the right way. Please reach out to me if you have any questions, I am always here to help with your mortgage needs!
Your Broker for Life,
Sherry Corbitt
Sources:
My Money Coach (2020). 5 Steps to Re-Establish or Fix Your Credit For Free in Canada. Retrieved from https://www.mymoneycoach.ca/credit/fix-credit
Experian (2020). How to Improve Your Credit Score. Retrieved from https://www.experian.com/blogs/ask-experian/credit-education/improving-credit/improve-credit-score/
