Repairing your credit rating

No longer asking, How do I get out of debt? When you emerge from the debt resolution of your choice, your next major undertaking becomes rebuilding (or repairing) your credit rating.

1. Ensure you have received your discharge papers or order from the court.

It will ultimately be your responsibility to ensure that the credit rating companies are up-to-date. Ensure you have your release papers, and send them a copy along with your appropriate ID. Information on how to contact the credit rating agencies in Canada can be found here.

1. Prepare a 100-word explanation on your credit file, if you believe this will help explain your situation.

You will want to be specific and unemotional, and make sure that you’re not sounding like you’re trying to shift blame onto some one else. Take responsibility for your part. And finally, proof-read it well, as it will become a matter of public record! (Clients of AMLD can have this crafted free of charge.) Bear in mind that lenders might not ever look at this explanation, and the the credit rating companies are not required to include it. They do it as a courtesy.

2. Mail a copy of the release order to both Equifax Canada and TransUnion Canada, along with your 100-word explanation.

Application forms can be found here (Equifax) and here (TransUnion).

2. Get your credit report.

Information on how to access your free credit report can be found here. You are allowed to request a free copy once a year.

3. Fix any errors on your credit report, and be sure that they have received copy of your release or completion.

Dilengently monitor your credit report when you receive it. Make sure the information on it is accurate and complete.

5. Open up a savings account and start saving money.

This is just common sense. You will want to re-establish a working relationship with a bank so that they can help you repair your credit. If it looks like you care — which is what building a savings account is all about — they will be more inclined to work with you. Also, it will provide you with collateral against any future loans (see next step).

6. Get a small loan using your savings account as collateral.

If you have $1000 in a savings account, you might consider approaching the bank and asking for a small RRSP loan. You will use your existing savings account, which you have been building, as collateral. The bank may well give you the loan, you’ll get a small tax write-off, and once you diligently pay back the loan, it will be reflected positively on your credit rating.

DETAILS

For more information, contact one of the credit bureaus directly at:

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