If you are someone who is recovering from a bad credit event, such as consumer proposal or personal bankruptcy, you should make every effort to resort to some lustre to that damaged credit history.
A good way to get started would be opening two new credit facilities and using them vigorously.
It’s not hard to spot a past bad credit event or a bankruptcy with a casual glance at your credit report. It is taken very seriously in the loan industrial world. Everyone deserves a second chance, here are some tips to help you progress.
Secure Credit Card
Most bank staff do not promote secured credit cards, and in some cases aren’t even aware they can offer such a product. But they do, and it’s often there for the asking.
Typically, they use them for consumers with no previous credit history, although they can make exception for others.
Be honest and explain how important your personal credit history is to you, and that you are embarking on goal to rebuild it and are willing to put up collateral to get their card.
If approved, your money will likely be invested in a term deposit or GIC.
Why is this a good idea?
Down the road as your credit bruises heal, you will be left with whatever credit facilities you put in place following the bad credit event.
Mortgage lenders and automobile finance companies will place more weight on a $2,000 visa card from a major institution than they will from one of the lesser card issuers.
And after a couple of years, the banks return your security deposit and life carries on.
With other secured credit cards, it’s extremely unlikely that will happen until you actually close the card. But when you close the card you lose all the goodwill and history you worked so hard to develop.
I recall advising a client to take $5,000 secured Visa from TD Bank four years after he completed his personal bankruptcy. Two years later, all mention of his bankruptcy had fallen off his credit report. He was in the branch one day and asked if they could return his security deposit. Not only did they return the deposit, they increased his limit that same to $18,300!
– Use the card very frequently
– Never, ever go over the limit, no matter how the small the limit
– Practice good credit hygiene and do not allow your statement balance to be higher than 20% to 30% of your limit. Ideally, your statement balance should be close to zero
– Get in the habit of making at least two, if not several payments each month from your online banking. Suppose you want to use your $300 card for all your gasoline and grocery purchases. You might need to cycle through your card limit four or give times each month.
The card issuer’s computer scoring algorithms will recognize your stellar use of their credit card and in most cases you will enjoy credit limit increase offers year or two. These tips work well for pretty much any card issuer.
Good luck on your journey of a better credit history.
Noble Mortgages is here to help you, Contact us Today at 416-241-2227