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Rebuilding Credit Tips: How Long Does Past Bad Credit Stay on Your Credit Report?

Time to rebuildWhen you’ve struggled to make ends meet, made less than the minimum payments (or no payments at all) on your bills, or had to choose which bills to cover and which to leave for the next month, your credit report is probably feeling the impacts right now. Your credit is based on current and past behaviour, and if you’ve been unable to keep up with your financial responsibilities, a dip in credit score will be the result. Don’t fret, we’ve got some rebuilding credit tips to help you regain a strong foothold.

First of all, how long does bad credit stay on your credit report? That depends on the severity. For example, everything on your credit report receives a rating from 1-9. A 1-5 rating represents 1-5 months in arrears. A 1 means you’re up to date, whereas a 5 means that you are 5 months behind. If you pay up to date when a 5 is listed you will return to a rating of 1. A 9, however, is the worst. It means that you are more than 180 days in arrears and represents a bad debt write off: a bad debt placed for collection or considered un-collectible, or you are bankrupt. This can’t be removed by paying up to date. A bankruptcy will stay on your credit report for 6 years after you are discharged and a consumer proposal (or debt management or debt settlement plan) will remain on your credit report for 3.

So, how can you work on rebuilding credit once it has gotten to this point? There are a few ways:

  • Moving forward make any and all payments on time, every month.
  • Try to pay more than the minimum payments.
  • Try to keep any balances low, or at least only 50% of the total available credit.
  • If possible, avoid closing credit card accounts. The longer your credit history, the better your score – just try not to use them.
  • Get a secured credit card. A secured card requires that you keep money in a linked account as collateral, thereby making you less of a risk. Make sure to make payments on time.
  • Obtain a small personal loan, one that you can use to pay down debt and to establish good credit behaviour.

Once you’ve worked on rebuilding credit for a few years, you’ll probably find that securing financing is much easier. It just takes time.

If you’re concerned that obtaining financing even with bad credit (currently) or as an undischarged bankrupt, Prudent Financial understands how important rebuilding credit is and we can help.

Call us today at 1-888-852-7647.

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