How to Rebuild Your Credit Score
Rebuilding your credit score takes time and patience, but it's absolutely possible. Here's your step-by-step roadmap to credit recovery in Ontario.
The Credit Rebuilding Timeline
While everyone's situation is different, here's what you can typically expect when rebuilding your credit:
3-6 Months
Initial improvements visible
6-12 Months
Significant score increases
12-24 Months
Good credit range possible
Step 1: Get Your Credit Report
Before you can rebuild, you need to know where you stand. In Canada, you can get free credit reports from:
- Equifax Canada: Free annual credit report by mail
- TransUnion Canada: Free annual credit report online or by mail
- Credit Karma: Free monthly credit scores and monitoring
Pro Tip: Check all errors carefully. Dispute any inaccuracies immediately as they can significantly impact your score.
Step 2: Pay All Bills on Time
Payment history accounts for 35% of your credit score—making it the most important factor. Here's how to never miss a payment:
Set Up Automatic Payments
At minimum, set up automatic minimum payments for all credit accounts.
Use Calendar Reminders
Set phone reminders 3-5 days before each due date.
Pay More Than Minimums
Even $25 extra per month can significantly reduce debt and improve your score.
Step 3: Reduce Credit Utilization
Credit utilization (how much credit you're using vs. available) accounts for 30% of your score. Target these ratios:
Strategies to Reduce Utilization:
- Pay down existing balances aggressively
- Make multiple payments per month
- Request credit limit increases (but don't use the extra credit)
- Spread balances across multiple cards if needed
Step 4: Consider a Secured Credit Card
If you can't qualify for regular credit cards, secured cards are an excellent rebuilding tool:
How Secured Cards Work:
- You provide a security deposit (usually $300-$1,000)
- Your credit limit equals your deposit amount
- You use it like a regular credit card
- Payments are reported to credit bureaus
- You get your deposit back when you close the account
Best Options in Canada: Capital One Guaranteed Secured Mastercard, Home Trust Secured Visa, Refresh Financial Secured Visa.
Step 5: Use Auto Financing to Your Advantage
Auto loans can actually help rebuild credit faster than credit cards because:
Installment Credit
Auto loans are installment credit, which diversifies your credit mix (10% of your score).
Consistent Payments
Regular monthly payments create a strong positive payment history.
Success Story: Many of our customers see 50-100 point credit score increases within 12 months of consistent auto loan payments.
Step 6: Be Patient and Persistent
Credit rebuilding is a marathon, not a sprint. Here's what to expect and avoid:
✓ Do These Things
- • Stay consistent with payments
- • Monitor your credit regularly
- • Keep old accounts open
- • Only apply for credit when needed
- • Consider credit counseling if overwhelmed
✗ Avoid These Mistakes
- • Don't expect overnight results
- • Avoid credit repair companies
- • Don't close old credit accounts
- • Avoid new debt while rebuilding
- • Don't ignore collection notices
Your Action Plan
Start Rebuilding Today
Don't let bad credit keep you from getting the reliable transportation you need. Auto financing can actually help rebuild your credit while providing the vehicle you need.