How to Secure and Rebuild Your Credit Score – And What To Watch Out For

One of the most common obstacles in an otherwise stable life is a low credit score.

The domino effect of bad credit extends to car ownership, home ownership, business loans, and virtually any equitable purchase.

Many people are unaware of how credit scores are determined, not to mention what can damage their credit score.

Things can go from good to bad in no time, and this could spell disaster for your life goals and ownership hopes. Thankfully, getting help with your debts is possible!

If you struggle to keep your credit score at a level that will allow you to have the life you’ve always wanted—stable, stress-free, and with major purchases—then keep reading!

What Hurts Your Credit Score?

Late Bill Payments

This is probably the most common way to hurt your credit score. Late bill payments, especially if it’s a regular habit, indicates a pattern of behaviour creditors and agencies refer to and cite to keep credit scores low.

Defaulting on Loans

Look no further than those who have trouble paying back student loans. Defaulting on any loan can result in years of difficulty as you climb the steep slope of credit rebuilding.

No Credit History

It might seem counterintuitive, but if you don’t have a credit history, your credit score might suffer. If you don’t have a credit record, it’s not the end of the world, but it won’t do you any favours, either.

How Do You Rebuild Your Credit Score?

Don’t Be A Spendthrift!

Minimizing your spending habits, especially frivolous purchases, will have an obvious upside for your credit score.

If you find yourself playing catch-up on credit card payments, cut back on your spending. Credit card debt is a big contributor to a weak credit score, so watch your spending and ask yourself if you really need something.

It’s also worth it to keep a nest egg. A comfortable amount in your savings account can help when unexpected expenses spring up.

Build A Decent Credit History

Say you’re just starting to struggle with debt, but have a decent credit history. Your score might take a hit, but that good history helps soften the blow.

Of course, building a credit history isn’t the easiest task if you’re starting at the bottom.

It’s worth your time to find a good debt counsellor, too. Debt counselling in Ottawa is not difficult to find, and good advice is often the main item standing between you and a healthy credit score. Research and find a Licensed Insolvency Trustee to help you manage your budget effectively while strategizing a way forward.

Career Planning and Stability

Life can be unpredictable, but a good career can help mitigate any challenges, pitfalls, or hurdles that might pop up, financially speaking.

In fact, employment and a good career path are probably the most important elements needed to rebuild your credit score.

It’s also worthwhile to sign up for a secured credit card.

Part debit card, part credit card, a secured credit card is probably the most common way for individuals to start building back their credit scores to levels where they can make major purchases or secure a loan for a car or home.

How Is Your Credit Score Calculated?

A credit score is a cumulative variable, measuring your credit and payments history. Your credit score is contrasted against other available scores and data.

It takes into account your entire credit and loan history, as well as your open accounts for bills and other regularly scheduled payments.

Should You Get A Consumer Proposal?

A consumer proposal is an option for people with either an R7 or R9 credit score.

Unlike declaring bankruptcy, a consumer proposal finds a way to pay creditors a percentage of what you owe. This reduced debt is typically paid over a 5-year period.

It takes three years for a consumer proposal to stop impacting your credit score, and those 3 years only start once the debt is paid in full.

Debt counselling in Ottawa is a compulsory strategy for anyone looking to climb out of their debt and improve their credit score. Worrying about debt doesn’t go away until a sound strategy is created, implemented, and followed with discipline.

Once you have found the strategy that is right for you, the road back to a good credit score will be closer than you think.

Life is hard enough without having to deal with a lousy credit score. But there are answers out there, answers that can provide you with peace of mind, as well as a reinvigorated sense of responsibility.

After all, everyone experiences financial hardships at least once in their lives, but making sure these hardships do not dictate years of falling behind and preventing you from securing financial stability.