How Long Does it Take to Build Credit Score in Canada?

How Long Does it Take to Build Credit Score in Canada?

Posted on May 11, 2021

Had a situation that impacted your credit score? Want to plan for a car loan anytime soon? Want to improve your score to get a lower rate? If you answered yes to any of these, our Hannon auto loan team have your back. Today we’re talking about rebuilding credit. We mainly cover how to do it and the time it takes to rebuild credit score.

Find out where you’re at

Your first step in rebuilding credit in Hannon is to find out your current situation. You’ll also need to know this to prepare for the auto loan too, so it’s a double win.

Check your credit report with TransUnion or Equifax to see your score. Your credit score should be somewhere between 300 and 900. The national average in Canada is apparently around 650, so set that as your target.

The lower your score, the more work you have to do to rebuild. But nothing is impossible so don’t worry too much.

While you’re there, check the report for mistakes and have them corrected by the organization that made them.

The Time It Takes To Rebuild Credit Score

How long the process takes depends entirely on your situation. That’s why this question comes after checking your credit report. The lower your score, the longer it will take.

You’ll see improvements from around 3 months if you follow some of the tips below. To fully recover can take anything from 18 months onwards. Again, the lower your score, the longer it will take.

Start rebuilding your credit in Hannon

Now you know your credit score, you know where you are and where you need to be, we can get on with rebuilding. We covered checking your credit score and having any errors corrected, now let’s move on.

Set up a budget – Budgeting is the core of financial management and that’s what we do next. Create a simple spreadsheet with a column for income, another for outgoings and a third for debts. Fill it in as completely as you can.

Face your debts – It’s tempting to file all the debt letters or emails away and not look at them but this won’t solve the problem. You only solve problems when you face them. Collate all your debts into your budget and place them in order of interest so you know the most expensive debt and the cheapest.

Negotiate with creditors – Talk to everyone you owe money to and negotiate lower rates, negotiate down your debt or a sensible payment plan. Many creditors will even reduce your debt by a percentage in return for a concrete payment plan.

Set up automatic payments – Set up automatic payments for all debts. It will prevent further missed payments and will help begin rebuilding credit.

Use your credit card – Aim to use a low cost credit card for daily expenses and pay it off in full each month. Set up automatic payments for it but plan to pay it off in full. This helps create a payment history, which will improve your score.

Managing debt is a long term strategy but one that can impact the rest of your life. When you are ready for that auto loan, contact our team for help.

We will use all our skill and experience to deliver the lowest possible Hannon auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.

Be sure to connect with us on Facebook, Twitter, Instagram, or LinkedIn to stay up to date on our latest great articles!