How to rebuild credit

If you’ve got bad credit, but are keen on moving forward financially, it can be challenging to erase the past, so to speak.

how to rebuild credit

“There is no way around it. Just like paying your debt down, rebuilding your credit takes time, effort and patience,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.

Wondering how to rebuild credit? Here are some simple steps for you to follow.

Be mindful of your habits

“There are a number of reasons that people end up with unmanageable debt loads. What is yours? It’s important to establish how you ended up with this debt so that you don’t repeat the same mistakes,” says Schwartz.

Some of the most common reasons that people end up with too much debt are having no budget, having no savings, living beyond their means, having too many credit cards or not tracking their spending.

If you can trace your debt problem back to any of these causes, make a conscious decision to change your behaviour. Establish a budget that includes savings. Live a cash-based lifestyle, with the exception of the credit that you will use specifically as a tool to rebuild credit.

Check your credit score

When your goal is trying to rebuild credit, you need to know accurately what you are up against. What is your credit score and credit rating? It’s important that you check these for a couple of reasons. You need to know the extent of the damage on your credit history, because it will give you an idea of the timeline that it might take for you to repair your credit.

Secondly, you need to verify that the information on your credit history is accurate. It isn’t always correct, and your credit history could be suffering as the result of a mistake.

Make a payment plan

If you need to catch up on payments, contact creditors to make arrangements. If you are on top of your payments, but have a substantial debt load that is constricting your cash flow, devise a plan on how you can most effectively (and quickly) pay down that debt.

Put your money where your mouth is

Want to prove to creditors that you’re deserving of a good credit rating? Show them. Plan to make small purchases every month using credit and pay them off in full on time- every time. Don’t wait for bills to arrive in the mail; be proactive in making your payments.

Creditors may require you to secure your credit card with cash or other assets.

Diversify your debt

It can help strengthen your credit if you can show that you are responsible with different kinds of credit. If you qualify, apply for a small installment loan and make those payments on time.

Consider doing an RRSP loan. That way you can build up your credit history and your savings at the same time.

Want to know how to rebuild credit? We have the answers! Call one of our trained credit counsellors at or check out our online debt analysis.

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Shivani Karwal
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pr@consolidatedcredit.ca
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