2015 is coming to a close, and the past year has likely been full of change – such is life. For many Canadians, this means more debt accumulation, followed by a concern regarding bruised credit. So, why not get started on your New Year’s resolution early and get a plan in place to repair your credit for 2016?

The first step is to request your credit report from Equifax AND Transunion – sometimes they report different information. This will give you a clear picture of where you stand credit-wise – as well as highlighting any issues with your credit, and should give you a good idea regarding how to start repairing it.

Generally people have credit problems which fall into a few different groups. Your plan to repair your credit will be based on what the problem is, but typically the problem is bad credit history – defaulted debts and late payments.

How you deal with this will depend on 3 factors:

• Whether you owe the money or not – if you don’t owe the money, see below regarding inaccurate items.
• Whether you have the ability to pay the debt – if you don’t have the ability to pay, see below regarding too much debt and maxed out credit cards.
• If you owe the money and can pay in full or settle in full, you are about to start a long and arduous process that will involve documenting what the creditor will accept to settle the account, paying it, collecting acknowledgement from the creditor that it has been paid and ensuring that your credit report is updated.

Something to keep in mind: R9s and collection items come off the credit report 7 years from last activity or when they were settled or paid – that said, you can begin rebuilding right away.

Old items and inaccurate items on the report:

In this instance you will need to file a dispute with the appropriate consumer reporting agency and be able to prove the error. This may include providing copies of letters or documented exchanges with your creditor, proof of payments, settlements, etc… This is a formal process – being represented is a good idea. If the agency doesn’t follow the law, a complaint to the government may need to follow.

Too much debt and maxed out credit cards:

In this instance you have to deal with the debt before you can fix the credit.

If there is a lot of debt and no reasonable way you can pay it off, even over a long period of time – making minimum payments, no assets or assets like a home with limited equity – a consumer proposal may be the answer.

Benefits of a consumer proposal:

• Stops interest and debt from growing
• Stops collection action
• Allows for one monthly payment
• Can be paid in full at any time – and because payments are generally much lower than the total of all minimum payments to your creditors, you can double and triple up on payments, use income tax refunds and other credits and get the total owed down!
• Comes off the credit report 3 years from the date it is paid in full

Once the proposal is filed, it should be independently reported to the credit reporting agencies immediately – the same should also occur once it has been paid.

Creating your 2016 plan to rebuild and repair your credit should not be stressful – you just have to sit down, be realistic about your credit and finances and make it happen!

Want to get started? Call DebtCare Canada today – we can help you through the entire process: 1-888-890-0888.