The 7 Biggest Credit Repair Mistakes to Avoid 

Credit repair is the process of improving your credit score. It can be a complex and time-consuming process, but it can also be very rewarding. If you’re struggling with poor credit, Credit repair can open doors to loans, credit cards, and other financial opportunities at better rates and terms. 

However, some common credit repair mistakes people make can actually do more harm than good. This blog post will discuss the seven biggest credit repair mistakes to avoid in Canada.  

Unfortunately, many people make common credit repair mistakes, which cause more harm than good. In this blog post, we’ll discuss the seven biggest credit repair mistakes to avoid in Canada:  

1. Neglecting to check your credit report regularly.  
2. Ignoring your credit score.  
3. Attempting to remove accurate information.  
4. Closing old credit accounts.  
5. Applying for too many new credit accounts.  
6. Not paying bills on time.  
7. Not seeking professional help when needed.  

You can improve your credit score and achieve your financial goals by avoiding these common credit repair mistakes. 

Mistake 1: Neglecting to Check Your Credit Report Regularly  

One of the credit repair mistakes that people make is not checking their credit report regularly. Your credit report lists a detailed summary of your credit activity, including your credit utilization ratio, payment history and the types of credit accounts you have. It’s essential to check your credit report regularly to check for any errors or inaccuracies that could negatively impact your credit score.  

You can get a free copy of your credit report from Equifax and TransUnion, Canada’s two major credit bureaus.  

Errors and inaccuracies in credit reports are a severe problem. It’s essential to monitor your credit report regularly for errors and inaccuracies. The errors on your credit report will have a negative impact on your credit score, and this will make it more difficult and expensive to borrow money.  

Here are some of the reasons why it’s essential to monitor your credit report:  

• To identify and dispute errors.  
• To detect fraud.  
• To track your credit progress. 

Mistake 2: Ignoring Your Credit Score 

Another common credit repair mistake is ignoring your credit score. Your credit score is a three-digit number that measures your creditworthiness, and lenders use it to see if you are eligible for loans and credit cards. It’s important to track your credit score regularly to see how your credit repair efforts progress. 

One of the most significant impacts of ignoring your credit score is its impact on your financial opportunities. With a good credit score, you’ll qualify for loans or different lines of credit with the best interest.

You can access your credit score through various credit bureaus, financial institutions, and credit card companies. You can also download free apps such as Borrowell or CreditKarma.

Mistake 3: Attempting to Remove Accurate Information 

If you see accurate information on your credit report, don’t try to remove it. 

Accurate information on your credit report is information that is truthful, complete, and up-to-date. This includes information such as your name, address, date of birth, credit accounts, payment history, credit utilization, and inquiries.

Inaccurate information on your credit report is information that needs to be more truthful, complete, and up-to-date. This includes information that is incorrect, missing, or outdated. For example, your credit report may contain inaccurate information if:

• Your name or address is wrong
• Your Social Security number is wrong
• You have a credit account that you do not have or never opened
• You have a late payment that you never made
• You have a credit utilization ratio that is incorrect
• You have inquiries on your credit report that you did not authorize

Disputing accurate information can actually damage your credit score. 

Only dispute inaccurate information on your credit report. This could include items such as late payments that you’ve already paid off, accounts that have been closed but are still listed as open, or incorrect credit limits. 

Here are some additional tips for addressing inaccuracies on your credit report:

• Be specific in your dispute. Clearly explain what information is inaccurate and why you believe it is inaccurate.
• Be polite and professional when communicating with the credit bureaus.
• Be persistent. If you do not hear back from the credit bureaus within 30 days, follow up with them.
• Keep copies of all correspondence with the credit bureaus.

Mistake 4: Closing Old Credit Accounts 

The length of your credit history, also known as the average age of accounts, significantly impacts credit scores. Lenders favor individuals with longer credit histories, reflecting a consistent track record of responsible credit management. A longer history provides more data points for credit scoring models, allowing lenders to assess creditworthiness more accurately.

On the other hand, individuals with shorter credit histories may face challenges as lenders have less data to evaluate their creditworthiness. However, responsible credit practices, such as timely payments, low credit utilization, and avoiding unnecessary inquiries, can still improve credit scores over time.

Closing old credit accounts can also damage your credit score. One of the factors in computing your credit score is your credit history, so closing your old credit accounts can do more harm than good. Instead of closing old credit accounts, try to keep them open and in good standing, even if you don’t use them often. 

Mistake 5: Applying for Too Many New Credit Accounts 

When you apply for a new credit account, a hard inquiry is placed on your credit report. This can temporarily lower your credit score. 

If you’re trying to repair your credit, it’s important to limit the number of new credit accounts you apply for. Only apply for new credit when you absolutely need it. 

When you apply for a new credit account, lenders will typically perform a credit inquiry to review your credit history. This inquiry is recorded on your credit report and can potentially lower your credit score.

Credit inquiries are categorized into two types:

1. Soft inquiries: These inquiries occur when you or an authorized third party, such as a potential employer, check your credit report for informational purposes. It does not affect your credit report
   
2. Hard inquiries: These inquiries occur when a lender pulls your credit report to evaluate your creditworthiness for a specific loan or credit application. This can temporarily lower your credit score.

Here are some strategies for responsible credit applications:

1. Only apply for credit when you truly need it. Resist to apply for new credit cards or loans just because you receive pre-approved offers or see enticing advertisements. Only apply for credit when you genuinely need it, such as consolidating debt, financing a major purchase, or improving your credit score.
2. Look for the best rates and terms. Don’t just accept the first credit offer you receive. Take the time to compare interest rates, fees, and terms from different lenders. 
3. Be mindful of your credit utilization ratio. Your credit utilization ratio is the percentage of your available credit that you’re currently using. You should keep your credit utilization ratio below 30% to maintain a healthy credit score.
4. Consider pre-qualifications before applying for credit. Pre-qualifications allow you to see which credit cards or loans you may be pre-approved for without actually submitting a formal application. This can help you narrow down your options and avoid hard inquiries, which can temporarily lower your credit score.
5. Space out your credit applications. If you need multiple loans or credit cards, try to space out your applications over several months rather than applying for all of them at once. This can minimize the impact of hard inquiries on your credit score.

Mistake 6: Not Paying Bills on Time 

Payment history is one of the most important factors in credit scoring. A good payment history shows lenders that you are reliable and trustworthy and that you are likely to repay your debts on time.

You can save a lot of money with a good credit score on interest rates and fees when you borrow money, such as for a mortgage, car loan, or credit card. It can also make qualifying for loans and other forms of credit easier.

Derogatory accounts such as late or missed payments can have a serious negative impact on your credit score. A single late payment can reduce your score by up to a hundred points. Multiple late or missed payments can cause your score to drop significantly, making qualifying for loans or credit difficult.

Aside from the damage it can cause to your credit score, late payments and missed payments can also lead to penalties or even legal action from creditors.

Here are some tips for improving your payment habits:

• Set up automatic payments for all of your bills. This will help you avoid late payments as long as you have enough money in your account to cover the payments.
• Review your budget regularly and ensure you are allocating enough money to cover your bills.
• If you know that you will be short on money for a particular bill, contact your creditor as soon as possible to see if you can make a payment arrangement.
• Avoid using credit cards to pay for unnecessary items. This will help you keep your debt levels low and make it easier to make your payments on time.

Mistake 7: Not Seeking Professional Help When Needed 

If you have a lot of negative and inaccurate information on your credit report and you do not have the time to fix it yourself, it is always best to seek professional help from credit repair counsellors or credit repair specialists.

The pros of credit repair are that credit repair companies can offer a number of benefits, including access to specialized knowledge and resources, negotiation with creditors, dispute of inaccurate information, and support and guidance throughout the credit repair process. However, it is important to weigh the pros and cons carefully before deciding whether or not to hire one.

The downside of credit repair is that hiring credit repair companies can be costly, offer no guarantees of results, and may use unethical or aggressive tactics. It is important to weigh these risks carefully before deciding whether or not to hire one.

If you are looking for a reputable credit repair company in Montreal, Quebec, Canada, Kenny Johnson University is an excellent option to consider.

Additional Resources and References 

Websites

• Credit Canada: A comprehensive website with information on credit reports, scores, and repair. https://www.creditcanada.com/
• Canadian Consumer Council: A non-profit organization that provides information on consumer rights and protections, including credit repair. https://www.consumerscouncil.com/
• Credit Counselling Canada: A national non-profit organization that offers free and confidential credit counseling services. https://creditcounsellingcanada.ca/