If you have poor credit, you are not alone. Research shows that more than 25% of Canadians have poor credit rating and can only qualify for a bad credit loan. Most of us know the impact of not having a good credit score.

Bad credit can ruin your chances of getting employed and getting the best rates on loans and credit cards. It can also limit your options for cell phone providers and even hurt your chances of renting a house.

Fortunately, having a poor credit score doesn’t mean it is the end of the world. With a little bit of knowledge, dedication, and commitment, you can rebuild your credit and qualify for loans at lower interest rates.

In this post, we highlight some of the things you need to do to rebuild your credit. So, let us get started.


1.    Review Your Credit Report

 Before you even start thinking about repairing your credit score, you need to know where you stand and what you need to focus on. Your credit report is a powerful tool that contains all the mistakes you have made that led to bad credit.

Whether you failed to repay your bad credit loan on time or missed any other payment, all this information will reflect in your report.

By law, you are entitled to a free credit report every year from all the leading credit bureaus. So, get a copy of your credit report and scrutinize it for mistakes you committed that led to bad credit.


2.    Start Paying Your Bills on Time

When potential lenders review your credit report, they are most interested in how you pay your monthly bills. That is because a good repayment history is considered a good predictor of future performance.

Therefore, it means that you can positively influence your credit rating by paying all your bills on time. Late or missed payments can negatively affect your credit score.  Make sure you pay your rent, utility bills, phone bill, credit card debt, auto loan, mortgage, and student loan on time.

If you are already behind on any payments, strive to bring them current as soon as possible. Although missed or late payments appear on your credit report for at least seven years, their impact on your credit score usually declines over time.


3.    Keep Your Unused Credit Cards Open

Keeping your unused credit card accounts open as long as they do not cost you money in monthly or annual fees is a smart way of rebuilding your credit. When you close your credit card account, you may end up increasing your debt utilization ratio, which is not good.

It means that owing the same amount but having few open credit card accounts may lead to poor credit scores.  So, keep your unused cards open and watch your scores improve steadily.


4.    Don’t Apply for New Credit

Finally, you must resist the temptation of applying for new credit if you are looking to rebuild your credit.  Each time you apply for new credit, a hard inquiry is conducted by the lender. If you accumulate too many of them in two years, a few points are deducted from your credit score.