Repairing Bad Credit – What to Do When Old Items Just Won’t Go Away!

When money is tight, and bills can’t always be paid, choosing one bill over another may seem like the lesser of two evils. What can it hurt, letting a bill go unpaid, then planning to pay it the following month? Then next month’s statement comes, and the amount owing has doubled, so you opt to pay it and leave a different bill unpaid. What originally seemed like a solid plan has quickly turned into a nightmare. When this is the case, repairing bad credit becomes incredibly difficult.

However, once you regain control of your finances, those items listed on the credit report should just disappear, right? After all, you are managing your money more effectively and not missing any bills. Unfortunately this isn’t how it works. This is especially true when items are sent to collections.

Evolution of an erroneous collection item on your credit report:

-You get behind with bills, and when bills are not paid monthly, these are reported to your credit report, causing trade lines for the credit product to go into default.

-Eventually that account is assigned to collections and a second item for the same debt is registered.

-Over time the account is cancelled with the collection agency and then assigned to another one, but the first one didn’t remove their item. The new collection agency now registers an item.

-Fast forward 7 years - when you would assume everything should be gone - but all 3 items are still on the credit report and it feels like they are impossible to get rid of! So what can you do as far as repairing bad credit?

Credit reporting agencies are regulated and have to follow the Consumer Reporting Act. They are regulated by the Ministry of Government and Consumer Services. According to the Act, after 7 years of no activity on an account (activity is a payment, using the account, writing off the account, etc.) it should be removed from the credit report. However, sometimes this does not happen.

What are your options? Should you just continue to wait and hope for the best? No. There is no guarantee that the agency even knows about the mistake - they probably do not. This means you have to get your credit report, prove that no activity has taken place, and then start the battle with TransUnion and Equifax.

Great, a battle has to take place? The pen may be mightier than the sword, but that doesn’t necessarily mean these agencies are apt to read whatever you’ve written. Sometimes it takes a bit more pushing and shoving to get the job done. What you need is someone in your corner who can take up arms in your defense, a representative with the knowledge and understanding of both how these agencies function as well as the importance this issue holds for your financial stability.

Bad credit makes it almost impossible to do anything, things like financing a home or car, and if you get the financing interest rates will be sky high! Don’t let the prospect of repairing bad credit scare you - it needs to be done.

DebtCare Canada has a brand new program that places a representative in your corner - someone with the ability to deal with TransUnion and Equifax and have old items removed from your credit report. When it comes to repairing bad credit, call us for help: 1-888-890-0888.

Knowledge is Power – Changes to Your Equifax Credit Report Part 2

So, you’ve reviewed part 1 of this blog series and you have gained a better understanding of the elements of your credit report and what lenders are looking for. But wait – there is more to just understanding those elements - now there are new things that are reporting to your credit report that were not included in the past.

In the past, primarily loans, credit cards and lines of credit reported in the trade lines area of the credit report. This meant that as long as you paid those creditors on time, if you paid your phone bill for example a month late, it wouldn’t negatively impact your credit report.

Well things have changed.

Mortgages – mortgages now report to your credit report. So, if you make a payment late on your mortgage, it will negatively impact your credit score. With this there is a new M Rating that relates to the reporting of mortgages.

Telecommunication providers – While a few phone providers (both cell phone and home phone services) started this practice a couple of years ago, most are now reporting to your credit report. Make a payment late on your phone bill and risk damaging your credit. Typically telecommunication providers register their rating as an O rating because the payment terms are every 30 days.

To review the entire Equifax Credit Report User Guide – click here: http://www.equifax.com/pdfs/corp/CIS-105-E_Consumer_User_Guide.PDF.

If you have bad credit reporting to your credit report and don’t know what to do – Call us because we can help. DebtCare Canada: 1-888-890-0888. 

Knowledge is Power: Changes to Your Equifax Credit Report Part 1

In this day and age your credit report really matters! Where in the past, generally speaking, only lenders would ask to see your credit, now employers, insurance companies, even gyms ask to see your credit report before extending services/credit. The slightest blip on your credit report can even impact your ability to rent an apartment – never mind buying a house.

Understanding the basic fundamentals of your credit report is very important. More important is understanding which elements lenders measure when determining if they will extend you credit. Making matters more complicated, Equifax is constantly changing what is reported in the credit report and often lenders will view a different version of your credit report than what you see when you request your credit report.

This 2 part blog series will discuss the elements of your credit report, what they mean, what elements are included and how lenders interpret those elements. In part two of this series we will discuss changes to the credit report and also some things that lenders see on your credit report that you don’t.

Click here to view the elements of your credit report.

Now that you better understand the elements of your credit report, check out the second part in our blog series next week where we will discuss new things that now report to your credit report and things that are different on your credit report vs. your lender’s version of your credit report.

For more information about your credit report to how to improve your credit or deal with bad debts, please call DebtCare Canada today at: 1-888-890-0888.

What is R9 Credit and How Can I Get Rid of It?

Many individuals who have an R9 on their credit report will often reference their credit as ‘R9 credit’, as though R9 is the credit rating.

Credit reports have an over-all rating. This is a number between 300 and 900. This rating is calculated based on everything that is listed on your credit report. 300 represents a poor rating and 900 represents the best rating. When you request your credit report this “score” is called a FICO score. When a lender requests your credit report they see the same score – this is called the “Beacon score”. A Beacon score and a FICO score are the same thing. R9 credit is not your overall credit score, although it will reduce it.

What is R9 credit? The letter R stands for revolving and the 9 represents a “bad debt write off” so an R9 credit score is a credit card, line of credit, store card or some other form of revolving credit that has gone into default. If you do not make a payment on a revolving credit product for 6 months your individual rating for that credit product will become an R9.

An R9 will remain on your credit report for 7 years from the date of last activity (this is the last date that you made a payment on the credit). Many people think that somehow R9 credit magically disappears after 7 years but it is important to note that it is 7 years from the date of last activity and it won't necessarily go away on its own. This is a very common credit report error that many people end up spending many months to resolve.

R9 credit can be resolved in one of a few ways:

1.       You can pay the debt in full – the R9 credit should be removed 7 years from the date the debt has been paid in full.

2.       You can make a settlement on the debt with your creditor(s) – the R9 credit should be removed from your credit 7 years from the date it is reported as settled.

a.       Settlements must be documented, including proof of settlement being accepted by your creditor and proof of payment.

b.      Equifax must be independently notified of the settlement.

c.       You must follow up to ensure that the settlement has been reported to your credit report.

3.       If you go to credit counselling, the R9 credit will turn into an R7 credit and the R7 will be removed from your credit report 3 years from the date the credit counselling plan is paid in full.

4.       If you file a consumer proposal the R9 credit will be removed from your credit 6 years from the date it is paid in full – make sure when you file a consumer proposal that you independently send proof of the consumer proposal to Equifax.

5.       A bankruptcy – the R9 credit will be removed from your credit 6 years from the date the bankruptcy is discharged – make sure when you file a bankruptcy that you independently send proof of the bankruptcy to Equifax.

6.       R9 credit can also be removed 7 years from the date of last activity if that was the last time a payment was made on the credit product. This is in no way a slam dunk – often creditors will continue to report activity to the credit report even after there hasn’t been any. Also, if the account is purchased by a collection agency, this can become extremely complex.

Having R9 credit on your credit report is not great – but it isn’t the end of the world either. There are ways to not only work to have the R9 removed but also to correct any other bad credit to help rebuild your credit score. Speaking with a financial consultant skilled in dealing with R9 credit is a smart practice.

If you have R9 credit and need help please contact DebtCare by calling 1-888-890-0888 or visit www.debtcare.ca.

 

How to Deal with Credit Report Errors

Thousands of Canadians have credit report errors on their credit reports – the scary part is many of them don’t even know it.

Credit report errors most commonly occur when your creditors don’t accurately report information to your credit report. The reason credit report errors are so common is because the data is reported electronically by your creditor to your credit report.

You may be getting declined for credit or quoted higher interest rates on credit because of credit report errors and new lenders you apply to for credit are not allowed to tell you what's on your credit, so it won't be pointed out to you.

The most common types of credit report errors are payments and settlements that have not been reported. The only way to avoid credit report errors is to know what's being reported to your credit report. The first step you have to take if you want to avoid credit report errors is to request your credit report from both Equifax and TransUnion.

Credit report errors can be extremely difficult to get resolved because Equifax will require evidence from you to support that there is an error and if you don’t have it or they won’t accept what you provide you then have to rely on your creditor to report the correct information. Creditors can take months to do so, if they do so at all.

The only way to get credit report errors corrected quickly is to know your rights and to dedicate the time needed to accomplish the task.

1.      The Ministry of Consumer Services is the ministry responsible for the Consumer Reporting Act which is the legislation that consumer reporting agencies like Equifax and TransUnion, as well as your creditors, must follow when reporting your personal information.

2.      Any communication concerning corrections that are needed should be sent in writing and should be sent by registered mail.

3.      You must know the timelines in which you should expect credit report errors to be updated, make sure that you request your credit report to ensure that they have been made and if they have not follow up again in writing.

Failing to ensure that there are no errors reporting to your credit report can have serious consequences. Not just because you may not be able to obtain the credit you need but also because you will most certainly pay higher interest rates on credit products if lenders view the credit report errors as derogatory which could cost you thousands of dollars or more.

If you are thinking right now that you don’t have the time, energy or know-how to take on your credit report errors on your own – you are not alone. Many who advertise ‘fix your credit’ programs are actually companies looking to see you deal with credit problems through a bankruptcy or credit counselling. We take the position that credit errors are credit errors – not bad credit - even bad credit can be addressed using various financial strategies that do not involve bankruptcy. Following the Consumer Reporting Act and leveraging our in-house legal counsel, we fight Equifax, fight your creditors and get your credit fixed.

If you need to fix credit report errors on your credit report, contact DebtCare Canada today by calling 888-890-0888.

 

How to Check Your Credit Score?

In Canada, a credit report and credit score is used by many different institutions, including banks, credit agencies, and even employers. These documents contain important information about your borrowing and repayment habits, and provide a detailed account of your past financial history. Even though these reports are so important, many Canadians are not familiar with the process of requesting and understanding the credit score.

Understanding your credit score is important for a number of reasons. One of the most important is because, whenever you apply for credit, be it a mortgage, automotive financing, or a credit card, your credit report is pulled by the lending institution and assessed. In order to qualify, you must meet certain qualifications with regard to the report, and so knowing where you stand is crucial.

What if your credit score is less than stellar? Too much credit, being too close to your limits or too many late or missed payments can severely reduce your credit score. In order to bring the score up, it might be prudent to speak with a financial debt consultant to discuss some options to reduce your debt and regain those lost credit points. Debt consolidation or consumer proposals are great options to help you get rid of your debt.

So, do you know how to check your credit score and credit report? Here is some important information that will help.

Requesting your credit score is actually quite simple. There are a few different credit reporting agencies in Canada, but the most popular are TransUnion and Equifax. Both of these agencies provide online copies of your credit report and credit score for a fee - simply visit the website, enter in some identity confirming information, and you will be able to print your credit report and credit score.

Another reason that it is important to understand how to check your credit score and credit report is to make sure that everything it contains is accurate. Credit reporting agencies can make mistakes when compiling the information, and if something is reported incorrectly this can harm your overall credit. It is important to check your report regularly in order to find any mistakes and remedy them. That being said, when a mistake is brought to the attention of a credit reporting agency you may find yourself frustrated by the amount of back and forth that takes place. If you find yourself having a hard time dealing with those credit reporting agencies and their unwillingness to accept responsibility or fix the incorrect data, contact a financial consultant who can help get the issue resolved.

If you want more information about how to check your credit score and how to understand your credit report, please contact DebtCare Canada by calling 888-890-0888 or visit www.debtcare.ca.

 

How Can I Fix My Credit?

We all know that bad things happen to good people. No one wakes up in the morning wanting to damage his or her credit. Thousands of Canadians have damaged credit, so if you are wondering “how can I fix my credit”, know that you are not alone and fortunately it can be done - and fairly quickly.

To all those who want the answer to the question “how can I fix my credit”, here are some tips:

Before you can repair credit you must deal with any past problem credit. First of all, the old adage that bad credit, even bad credit with unpaid balances, will simply fall off the credit report after 7 years is a myth and banking on that happening may leave you disappointed in the end. Before you can repair your credit you must get rid of unpaid balances associated with bad credit. Easier said than done, right? Well, actually it isn’t. There are many programs available to consumers who have outstanding balances on bad credit where you can make settlements at significantly less than what you owe and freeze the interest accruing. Debt consolidation is another realistic option. Leveraging home equity or having a co-signer can enable you to consolidate debt, paying off the defaulted balances.

Once the bad credit balances are dealt with it’s time to get to work and rebuild. The two best products that can be used to accomplish this are a secured credit card which reports to your credit report coupled with a secured loan like a GIC which will report to your credit and enable you to work towards an asset. Avoid credit products that bear sky high interest and don’t report to your credit report like payday loans.

Once new credit is arranged to rebuild, how you manage the new credit will be vital. Many misguided consumers think that when they get that secured credit card they should use it and make monthly payments to rebuild. Unlike installment credit (a loan), revolving credit can be good for your credit or ruin your credit depending how you manage it - even if you make your monthly payments on time. If you run up a large balance on your secured credit card and it is close to, at, or over the limit, this will negatively impact your credit. A good rule of thumb is to only use what you can pay in full each month and don’t exceed 50% of your credit limit as a balance. This means that if you have a secured card with a $200 limit, keep your monthly spending on the credit card under $100 per month. How you manage even the smallest credit card is an indicator to future creditors of whether or not you are a credit risk.

What to avoid: avoid store cards like furniture cards. All too often people buy furniture and get financing on a card offered through the store. If you buy $2,000 worth of furniture and then they get you approved for $2,000 worth of financing – even if it is interest free and even if there are no monthly payment obligations - this will have the impact of a maxed out credit card on your credit report. Avoid making more than 4 applications for credit in any one given calendar year. Credit applications are reported to your credit report and too many will reduce your credit score and make you appear as a “credit seeker” to new creditors. Be careful because many companies will try to look at your credit: employers, banks when opening accounts, gyms, insurance companies, etc. Generally speaking, if you are about to go into a contract with any organization and you are being asked to sign something, read the small print – it could include your permission to access your credit report.

Now that we have addressed the question “how can I fix my credit”, let's get started! Contact DebtCare Canada today at 888-890-0888 or visit www.debtcare.ca.