Repairing Credit in Moncton
Most people know that credit scores exist.
They know that lenders and businesses keep track of your credit score in order to determine what kind of services they offer you.
However, most people don’t take a look at their credit reports.
For starters, they either don’t know how to or they think it’s expensive.
Some people might even be worried that they won’t understand their credit report, making it a pointless thing to request.
However, looking at your credit report and understanding your ratings is a step in the right direction when it comes to achieving financial freedom.
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If you do indeed have a poor credit score, then it’s in your best interests to focus on fixing it as quickly as possible.
Doing so will give you access to more credit options, such as personal loans and mortgages, and will ensure that your long-term financial plans will be a success.
So in this post, we’re going to take a look at how you can get the best credit repair services in Moncton.
This guide will help you avoid some of the expensive services out there that advertise credit repair services, and it will help you fix your bad credit without the risk of accumulating debt.
What exactly is a poor credit score?
First, we need to identify what a poor credit score is.
This is so you don’t waste time trying to fix your credit score if it’s perfectly fine.
In Canada, your credit score ranges from 300 to 900, with 900 being a perfect score.
Most people won’t achieve this unless they’re extremely disciplined with their money.
The average for residents in Moncton is around 650.
A poor credit score would be between 300 and 550.
If your credit report shows that your credit score is around this value, then it’s a good idea to look for ways to repair it.
However, if your credit score is slightly higher than 550, you can generally improve it by focusing on maintaining your credit repayments and holding back the urge to spend more credit or take out more loans.
The best way to repair your credit score if it’s a little below average is to just focus on stable practices that will help you deal with any outstanding financial obligations.
So if you’ve recently requested a report and it shows that your credit score is below 550, continue reading to find out more about how to repair your credit score.
How does one repair their credit score?
When it comes to repairing your credit score, there are two main factors to focus on:
- Limiting the amount of credit you use
- Making regular payments to your current credit
When you limit the amount of credit you use, you reduce what’s called “Credit Utilization”.
This is a metric that is used to judge how reliant you are on your credit.
The more reliant you are, the more likely lenders will try to avoid you because it’s a sign that you’re not making enough money to pay off your credit.
While some lenders might find this to be attractive because you’re paying a lot of interest, they might also be worried that you’ll default on payments and they won’t see any money from you.
It’s also important to make regular payments on whatever credit you’ve currently taken out.
This could be a personal loan or credit card payments.
By making these payments consistently, it shows that you’re making enough income to pay off your debts.
This will slowly increase your credit score and help you repair your financial health.
These are the two main concepts to focus on when repairing your credit score.
Luckily, there are many ways to achieve both of these effects.
In this article, we’re going to talk about two main options that are popular in Moncton; credit rebuilding loans and a cash secured credit card.
Should I use a credit rebuilding loan?
Credit repair companies like to advertise that they can help you in a safe and efficient manner.
In reality, what these services do is give you a high-interest rate loan.
The idea is that you take out a loan for something you can afford, pay it back on time, and this will gradually improve your credit score.
However, if you miss a payment, you can expect to pay back a considerable amount of money because the interest rates are extremely high.
However, assuming that you can pay it back on time, it’s a great way to repair your credit score and it’ll look good on your report.
Unfortunately, these credit repair services can easily be abused, especially if you’re not good at managing your money.
Considering these services target people that already have a poor credit score, there’s a good chance that they’re struggling with their finances or have a tendency to max out their credit limits.
If they continue the same attitude with these credit repair services, they’ll likely end up in some serious debt.
While it does seem stressful in a financial sense, it does tick the boxes of credit repair.
You’re limiting the amount of credit you use and you’ve also got a line of credit to make regular payments to.
When you have a poor credit score, you might find it difficult to open up a line of credit to use for the sake of fixing your score.
A credit rebuilding loan is specifically designed with high-interest rates in mind so that lenders can justify working with people that have a poor credit score.
Unfortunately, with its high-interest rates and fees, it’s not the best option out there.
It’s very easy to be taken advantage of when you take out a credit rebuilding loan since the terms and interest rates can be through the roof.
Should I use a cash secured credit card?
The other common option to use is a cash secured credit card.
This is generally considered a much faster and safer way to improve and fix your credit score when compared to a credit rebuilding loan.
A cash secured credit card essentially works the same as a regular credit card.
You set a credit limit (usually around the $300 mark) and then it functions like any other credit card.
You can use it in stores or even online to make typical purchases.
However, there are some key differences to remember:
- Secured credit cards typically don’t require a credit check because they’re used to rebuild your credit score;
- You might be asked to put down a security deposit, hence why it’s called a secured credit card and not an unsecured one;
- If you miss payments, the lender could take some of the deposit in order to pay what you owe them;
- You typically only get the deposit back once the card has been closed;
- The deposit might also determine your credit limit;
- The more you deposit, the more you can borrow each month.
In other words, you can think of a secured credit card much like any other credit card, only you need to put down a deposit in order to provide the lender security should you fail to make repayments.
This means you’ll need a bit of money to deposit before you get your card, but it also means that you can manually adjust your credit limit depending on how much you can afford at the time.
Going back to the two main concepts on how to repair your credit score, a secured credit card ticks both boxes.
For starters, you can control your credit limit with your deposit which means you can essentially set your limits and increase it if needed.
Since it’s a credit card, you’re also not forced to use the money for something and you could go weeks without even touching it.
Secondly, since it’s a credit card, you’ll be asked to make regular repayments which can help you repair your credit score.
A secured credit card offers many advantages over typical credit rebuilding loans.
To contrast the two, here are some of the biggest differences you can expect:
- Since it’s a credit card, you’re not forced to take out a big loan to buy something and you don’t need to use an expensive purchase as a reason to rebuild your credit score. Instead, you can use your secured credit card on everything from weekly grocery shopping to paying for an entertainment device that you can afford with your savings.
- It’s less expensive than a credit rebuilding loan because there aren’t excessive fees and you’re not expected to pay interest as long as you can pay off the balance every month. You’re also not forced into making a big purchase because you set your own credit limit.
- It offers more flexibility and freedom because you can use your card to pay for virtually anything. Every purchase you make, whether it’s big or small, will contribute to fixing your credit score.
- If you take out a credit rebuilding loan, you’ll be locked into those monthly repayments. This means that if you were to lose your job, get a reduced volume of work or even become sick, you still have to make those repayments in order to continue repairing your credit score. However, with a secured credit card, the money is still there to help you pay for emergencies and you won’t be expected to pay back interest or repayments since you haven’t taken out any credit.
We strongly suggest that you try a secured credit card as a way to repair your credit score.
Yes, there’s a deposit and an annual fee, but in comparison to taking out a large loan just for the sake of repairing your financial health, it’s far more flexible and manageable for most people.
Luckily, there are plenty of services that offer fair rates on a secured credit card in Moncton, making it one of the best ways to repair your credit score.
What about other options such as debt relief?
There are a variety of different ways for you to improve your credit score in Moncton.
Take a brief look around and you’ll find things like debt relief programs that promise to help you repair your credit in record time.
Unfortunately, these alternate solutions require a heavy investment and they’re usually designed to give the lender the most benefit.
These debt management and relief programs are also fairly complicated and you’ll need professional assistance if you want to understand them.
Can I repair my credit score for free?
Technically you don’t need to spend a single penny to repair your credit score.
As mentioned before, the two main factors are to limit your credit spending and pay off your existing credit.
If you do this and stay under 50% utilization, you’ll have a fairly easy time at fixing your credit score.
Here are a couple of other tips that will help you repair your credit score without the need for an external service.
- Close any credit accounts you don’t use so that they don’t affect your credit score.
- Look at your credit report for any incorrect details so you can challenge inconsistencies.
- Use sources of credit that you can pay back.
- Don’t leave your credit idle, make sure you use it for something so you can pay it back and show that you’re in a good financial position.
- Readjust your budget so that you’re dedicating most of your funds to paying off credit.
We hope that these tips have helped uncover the differences in credit repair methods and why a secured credit card is one of the most flexible and approachable options.