Tempted by a Credit Repair Company in Vancouver? How to Do Better for Free
Some credit repair companies in Vancouver are trying to sell expensive services that often saddle people with more debt and don't provide many with the value they'd expect to receive. On top of this, when some people aren't able to make the payments on their new credit repair loan, the credit repair company can send the loan to collections which puts these people in jeopardy of having worse credit than when they signed up for the program. While this may be unsettling, there is some good news. In Vancouver you can repair and improve your credit for free – and often get better advice and more one-on-one help than a lot of credit fixing companies provide. Keep reading and we’ll show you how to do this.
Credit Repair Services, Companies & Agencies – Pay Less Interest & Fees to Fix or Improve Bad Credit
The goal of credit repair companies and services is to help people improve their credit score – often claiming to be able to improve it quickly. The way many of them appear to do this in Canada is by offering credit building loans. The idea is that this loan will create some new good credit on your credit report and show the credit scoring system that credit is available to you and that you are using it responsibly.
This approach undoubtedly helps a fair number of people improve their score, but we think that it comes at much too steep a cost for many consumers. A credit building loan ensures that a company can charge someone interest and fees every month over many years. But there is a better, cheaper, and more effective option.
Advantages of a Cash Secured Credit Card Versus Credit Building Loan to Improve, Restore or Fix Your Score
In Vancouver, a cash secured credit card can be a much better and faster way to fix, improve, or restore your credit score compared to a credit rebuilding loan. A cash secured card requires you to put up some money as security for the credit card. The cash security required can be as little as $200 or $300. This credit card then functions as a completely normal credit card.
Here are the advantages of a cash secured credit card compared to a credit rebuilding loan:
- The cash secured credit card can provide a much quicker and greater boost to your credit than a loan.
- It is far cheaper than most credit repair loans because it only has one annual fee, and you don’t have to pay any interest costs or fees if you pay off your balance in full every month.
- It’s far more affordable because you don’t have to fit a credit repair company service fee and/or monthly loan payment into your budget. Instead, you simply use your card to pay for something that's already included in your budget – something like gas for your vehicle or a transit pass. You then completely pay off the card balance when you receive the bill. This doesn’t end up costing you anything extra since you were planning to purchase the gas or transit pass anyway.
- With a loan, if you get injured or become sick, if your hours at work are reduced, if you get laid off, or if your income drops and you can no longer manage to pay your monthly loan payments, then your loan would likely be sent to collections. Your credit score would again be damaged, and you'd probably experience more stress in your life. With a cash secured credit card, on the other hand, if you don’t choose to buy anything with it, then you don’t have to make a monthly payment. Even if your life hits a bumpy patch of road, your credit should still continue to grow stronger, and you shouldn't experience any of the problems that a credit rebuilding loan would likely cause.
The bottom line, from our perspective, is that a cash secured credit card is a much better way of giving your credit score a boost and rebuilding your credit. The thing to remember with a cash secured credit card is that you always need to make at least your minimum monthly payment. If you miss a few months of payments, the credit card company will take money from your deposit, pay off what you owe, return any money left over, and then cancel the account. This will show up negatively on your credit report.
Most people think that you have to use a credit card a lot for it to help your rating. That’s not true. It’s okay to use it once every few months for a purchase that doesn’t use more than 50% of your credit limit. Then when the bill comes – and it’s important to wait for it – you pay it off in full.
As your finances improve, you may also want to consider increasing your credit limit to between $1,000 and $2,500. This may require a larger cash security deposit from you, but having more credit available to you and not using it will increase your credit score even more.
Here is a government list of a bunch of secured credit cards. Just select your province and then you can compare the cards. Here is another list with a few more cards that aren't included on the government's list.
If you’re wondering where you’re going to get the money for the cash security on a card, here are a whole bunch of ideas of places where you could possibly find the money.
What You Need to Watch Out For with Debt Relief Programs & Solutions in Vancouver
To make more money off of you, some credit repair companies and agencies also promote certain debt relief programs and services. If you are struggling to pay your bills and debt payments each month or have some bad debts you need to deal with, then some sort of debt relief option may be very helpful for you. Just be aware of these three things:
- Every debt relief option (there are 5 of them in Canada) has as many disadvantages as it has advantages. If they didn’t, then everyone would be signing up for one of these programs. The key is to find the debt relief option with the right advantages for you and disadvantages that you can live with. Beware of anyone who pitches a debt relief program to you and focuses too much on the positives and doesn’t spend much time making you aware of the negative aspects of the program.
- If the person trying to sell you a program earns commission off of you signing up for the program, then they may have their financial best interests at heart and not yours. The fewer options their company offers, the more often this will be true.
- There is always more than one way to fix, improve, or restore your credit, and when it comes to debt relief options, there are five of them in Canada (debt management program, orderly payment of debts program, debt settlement, consumer proposal, and bankruptcy). So if you get the sense that the person or company you are dealing with isn’t exploring all your options with you or is favoring one over the others (or isn’t even mentioning the others), then you may want to look for a second opinion with someone who will more objectively discuss the pros and cons of all your options with you.
How to Fix, Improve or Restore Your Credit Score on Your Own for Free
It's not necessary to pay anyone on a regular basis just to help you restore or improve your credit score. We have all of the best credit score tips that really work right here – for free. Check them out. We’ll show you how you can repair your credit as quickly as possible along with the most effective methods that take a bit more time. In addition to this, we can also show you what's needed to get an amazingly high credit score. If all of this seems a bit much for you, if you have a complicated situation, or if you’d like some individual help and guidance, there are financial experts located close by you who have expertise in assisting people with bad debt – and they’ll usually help you for free!
Where to Get Free Individual Credit Help in Vancouver to Fix Your Bad Credit Rating
Free Advice and Guidance from Non-Profits in Your Area
A lot of people don’t know this, but some of Canada’s most helpful experts on fixing bad credit situations and completely repairing credit ratings are non-profit Credit Counsellors who offer free appointments (either over the phone or in person) in communities across Canada - including Vancouver. If you have debts you are struggling to pay or are struggling in some way with your finances, they are the best people to sit down with and go over your financial situation. Anything you discuss with them is completely confidential, and don’t worry if your situation is really bad. They’ve likely seen far worse. They're not going to make you feel bad or judge you. They are simply there to help people. Click here to find a local non-profit credit counselling service near you.
How to Get Free Credit Score Repair Help in Vancouver from Your Bank or Credit Union
The lender at your bank or credit union is a good person to ask about your credit rating. You might have applied for a loan and been turned down. Don’t be embarrassed, but use it as an opportunity to learn what you can do to get your finances back on track. When a lender declines you for a loan, line of credit, overdraft, or something else you applied for, they can tell you why. Ask them to explain anything you don’t understand. Then ask them what you can do, very specifically, to improve your credit score and credit rating. If you’ve applied for a mortgage, ask your mortgage broker these same questions.
Get a Copy of Your Credit Report for Free
If you have never seen your credit report and are curious to find out how bad things really are, you can obtain a free copy of your credit report by following these steps. To get your credit score, you’ll have to pay a fee of about $15 - $30 to either Equifax or TransUnion, the two credit reporting agencies in Canada. This tool can estimate your credit score for free. This tool also lets you adjust your answers to the questions they ask, giving you an idea of how changing certain things can increase your score. This kind of specific feedback is hard to get anywhere else, and certainly not from paid credit repair companies, if you can find it at all – and it’s available to you for free.
Save Money & Do It Yourself - Repair, Fix or Improve Your Credit on Your Own
If you are in Vancouver and really are planning to find a credit repair service to help you improve or repair your credit, we truly believe that you would come out ahead if you do it yourself. To begin with, get a free copy of your credit report (only order your score if you really need it because it changes often). Then speak with your banker or a credit counsellor for information and advice. Seriously consider applying for a cash secured credit card if they believe it would help your situation. Finally, follow the suggestions we explain above, as well as what is in the information provided in the resources we link to. Fixing your credit takes time and care to do the right things. Work through what we explain above; not only will you save a lot of money, your credit rating should be rebuilt as quickly as possible.