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Tips on repairing your credit

Credit reporting services collect credit and debt information from banks, lenders, credit card companies, leasing forms, courts, and elsewhere. Those services report on your debt, available credit, and the public record regarding your finances. Credit reporting services do not report on your annual income, family income, or bank balances. Two of the major credit reporting services in Canada are Equifax and TransUnion Canada.

Any negative credit history about you is usually kept on file for six to seven years from the last date of activity. The precise lifespan of negative credit history varies depending on the type of credit-related incident. The lifespan of negative credit history also varies according to your province or territory.

Credit reporting services also maintain records of inquiries made by lenders and others into your credit-worthiness. Equifax maintains records of those inquiries for three years. TransUnion Canada maintains records of those queries for six years.

Credit history information held by credit reporting services can contain errors. Errors in information provided to those services can result in misstatements in your credit record. In some cases, debts belonging to some different individual may appear in your record. Individuals should review their own credit histories at credit reporting services, and seek to have any verifiable errors corrected.

Bad credit reports can be repaired. You can fix bad credit reports yourself for little cost, or retain a “credit repair” service to do so for a fee.

There are several steps that can be taken to repair your credit.

First, request access to your personal credit report. You can usually obtain your credit report from a reporting service by mail or online.

Second, identify any errors in your personal credit report and advise the reporting service of them. The credit reporting service may provide you with a form for doing this. You will usually receive a written response from the credit reporting service within 30 days. That response will explain what steps were taken to remove error or confirm the information on file. It may not be able to correct all errors by working with the credit reporting service. Remember that they rely on information obtained from third parties, such as banks and credit card companies. You may have to contact those third parties to correct information before the credit reporting service can amend your credit record.

Third, you can improve your credit score by paying outstanding loans and debts. You may also improve your credit rating by paying your bills in full by their due dates.

Fourth, you can repair your credit rating by reducing the number of your credit cards. Some major lenders do not look favourably on high interest credit cards offered by retailers.

Innovation, Science and Economic Development Canada maintains the Office of Consumer Affairs. You can obtain additional information about debt, financial issues and improving your credit at its website.