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How You Can Raise Your Credit Score If It's Low

Saturday, June 19th

How You Can Raise Your Credit Score if It's Low

So you're one of the 220 million Americans who have bad credit - resulting in a low credit score that has rendered it nearly impossible to secure a loan at decent interest rate you can afford. But don't despair. There is hope for repairing the damage and restoring your credit.

Credit reports are used in a variety of ways and by a number of different agencies. Credit card companies, utility companies and financial institutions all use a person's credit report to determine financial stability. Even employers are jumping on the credit-reporting bandwagon, using a potential employee's credit report as part of the hiring process.

The recent recession also has created quite a credit crunch for those with bad credit histories. As part of new financial legislation, banks and other financial institutions were required to write off record numbers of debt in order to comply with the law. Unhappy with losing out on the ability to collect on that debt, financial institutions have gotten a lot pickier about to whom they lend money, closely scrutinizing credit reports and scores prior to agreeing to do business with a particular lender.

So what do you do if you suspect your credit score is keeping you from excelling financially?

The first thing to do is to request a copy of your credit report from all three credit reporting agencies. Equifax, Experian and TransUnion are the three credit-reporting agencies that compile financial histories on consumers in the United States. The Fair Credit Reporting Act indicates that every consumer is entitled to one free credit report annually. You can opt to receive one from each of the credit reporting agencies, or from just one of them. Because each agency collects data differently, it may be wise to request a report from each of the three agencies.

Once you have your credit reports, pore over them carefully, checking for any discrepancies or outright errors in your financial history. A common reason for misinformation on a credit report is that another individual shares a name similar to yours, and their information has accidentally found its way onto your report. Another reason for errors can be identity theft. If there are accounts listed on your report which you do not hold, it is important to dispute them with the credit reporting agency, and immediately request that a fraud alert be placed on the accounts in question.

If there are no mistakes on your report and you simply have bad credit due to past financial indiscretions, there are ways to help repair the damage.

  • Pay bills on time. Failure to pay on time or at all can have a serious negative impact on your credit report. It is best to make small payments rather than to forego them at all. Complete avoidance can result in a collection agency taking over your account, which is detrimental to your credit score.
  • Low balances are best. Many consumers erroneously assume that racking up huge sums on credit cards is the best way to "build" credit. The exact opposite is true. If you already are struggling with paying off debt, running up large amounts on credit is never a good idea.
  • Don't apply for new credit. Every time a consumer applies for a new credit card, their credit report takes a "hit" and their credit score lowers a bit. It also is wise not to close credit accounts which you aren't using for the same reason. It is better to leave them open without balances than to close them.

Lastly, do not be afraid to seek out the help of a reputable consumer credit counseling service, which may be able to help you reduce your payments so that you can begin to pay off all debt owed, rather than simply moving it around. TopConsumerReviews.com has reviewed and ranked the best credit repair services available today.

The Best Canadian Credit Monitoring Companies Compare Canadian Credit Monitoring Companies Compare Canadian Credit Monitoring Company Reviews What are the best Canadian Credit Monitoring Companies Best Canadian Credit Monitoring Company Reviews

Canadian Credit Monitoring Company FAQ

Credit monitoring can mean two things: getting your credit score and report, or tracking inquiries made on your credit report with the intention of spotting fraud or identity theft. When you see services offering "credit monitoring" , most free platforms in Canada only offer you access to your credit score/report, while paid providers include tracking of your credit report and insurance against identity theft.
In Canada, there are two bureaus responsible for reporting consumer credit: Equifax and TransUnion. Each bureau uses different methods of calculating your credit score; some lenders and creditors prefer one over the other.
It might, depending on which service you select. Some free credit monitoring platforms in Canada give you access to your credit score and history, but you're responsible for looking for errors and fixing any problems you find. Paid services almost always monitor your account for any suspicious activity, help you freeze your accounts, and often include restoration specialists to guide you through the process of recovering your identity. You may even have identity theft insurance included in your paid package.
Some credit monitoring services in Canada are absolutely free. Most paid credit monitoring services cost between $11 and $30 per month, depending on the level of service you select and how many people you're covering (an individual vs. a couple or household).
Not necessarily. Your bank probably gives you access to your credit score when you sign into your account, but not a copy of your credit report. Plus, your bank doesn't have access to your credit cards, loans, or other creditors' information; they won't be able to spot fraudulent activity on any accounts outside of their institution.
If you use your monitoring service well, yes. Even with a no-fee credit monitoring platform, you can keep an eye on your credit score and act quickly if you notice anything out of the ordinary. Also, almost every credit monitoring service includes ample financial education, to help you understand money even better and to make good decisions for a healthy credit report.
Contact the company that is reporting the inaccurate information. It could be a simple administrative mistake. However, if you suspect that it's fraud, you should contact Equifax and TransUnion to inform them and ask that a fraud alert be placed on your credit reports. You should also report the fraud to the Canadian Anti-fraud Centre, and contact any lenders or other organizations that might be affected by the breach.
It's worth considering. Identity thieves often target children's information, because they can often use it for many years before being caught. Some credit monitoring programs in Canada offer discounted pricing for family plans.
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