What steps can I take to rebuild my poor credit history?

Your credit history is an important financial tool that opens your ability to secure things like a mortgage, line of credit and credit card.

Having a solid credit history signals to financial institutions that you are reliable and can pay off credit in a timely manner.

So, what should you do if your credit history is poor?

“The first thing that we definitely recommend where possible is paying your bills on time as it’s the easiest way to rebuild your credit history,” says Natasha MacMillan, director of everyday banking at Ratehub.ca “It isn’t the act of paying your bill on time that boosts your credit score, but the absence of negative items such as late payments actually impact you.”

Jason Heath, managing director of Objective Financial Partners, agrees. In some cases, Heath says you can even apply for new credit to improve your credit rating, as doing so lowers your credit utilization ratio.

Your credit utilization ratio is the amount of credit you’ve used relative to the amount of credit available to you. “We really recommend to stay below your credit limit,” says MacMillan. “So we recommend that your balance should be under 30% of your available credit.”

She also recommends setting up automatic payments so that you pay bills on time.

“Lastly, a great way to build your credit and for people with poor credit is to consider a secured credit card,” explains MacMillan. “The way a secured credit card works is you pay a deposit to the credit card issuer that acts as a collateral.”

There’s no quick fix or set timeline for repairing your credit history.

“Establishing your credit rating is a slow and steady process,” says Heath. “If you get behind or mess up your credit rating, then the best thing you can do is start the small steps to improve it.”

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