Tempted by a Credit Repair Company in Kitchener? How to Do Better for Free

There are some companies who are selling costly credit repair services in Kitchener that sadly, often leave people struggling to pay more debt than they started with. Based on how much they charge for these services, it’s likely a lot of people would expect to receive a lot more value than what they actually receive. What’s also surprising is that services like this can possibly make someone’s credit worse if they are unable to make all their payments, and their new credit repair loan is sent to collections. Although this may be unnerving, here is some good news: you can repair and improve your credit score in Kitchener for free – and even get more one-on-one help and better advice than a good number of credit fixing companies provide. Keep on reading, and we’ll tell you how to get this.

Credit Repair Services, Companies & Agencies – Pay Less Interest & Fees to Fix or Improve Bad Credit

The goal of credit repair services is to help each of their customers improve his or her credit score. The primary way many of them do this in Canada is by providing credit building loans. The idea is that this loan will create some new good information on someone’s credit report, which shows the credit scoring system that this person is able to borrow responsibly.

This method likely helps a good number of Canadians boost their credit score, however in our minds, it’s a much too expensive option for a lot of people. The credit building loan allows the credit repair companies to charge interest and fees for their service every month over several years. But we believe there is a better solution that is cheaper and more effective.

The Fastest & Cheapest Way to Fix, Improve, or Restore Your Credit Score in Kitchener - Use a Cash Secured Credit Card

Compared to a credit rebuilding loan, a cash secured credit card is a much quicker – and in our experience – a more effective way to improve, restore, or fix your credit score in Canada. A cash secured card requires you to deposit money as security for a card. The cash security that’s needed can be as little as $225 or $350. This card is then just like a normal credit card.

Here are the advantages of a cash secured credit card compared to a credit rebuilding loan:

1. The cash secured credit card can provide a much quicker and greater boost to your credit than a loan.
2. 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.
3. 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.
4. 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.

In short, a cash secured credit card is a far better way to rebuild your credit or give your score a boost. Just make sure that when you use it, you always make at least your minimum monthly payments. If you miss a payment, the credit card company won’t take the monthly payment from your cash secured balance. You will still need to make it and not making the payment will hurt your credit. If you miss a number of payments, the credit card company will close your card and give you your cash security back after deducting any money you owe them.

Another great advantage of a cash secured credit card is that you don’t have to use it much. All you need to do is use it once every few months or so to keep the card active and never use more than 50% of your credit limit (doing this will negatively impact your credit). We would also recommend that you always pay off the card balance in full every month and never carry a balance.

As your financial situation gets better, you may want to think about increasing your credit limit to somewhere between $1,000 and $2,500. This may mean that you’ll need to increase your cash security deposit but having a larger credit limit like this and not using it will boost your credit score even more.

Here's a government list of most secured credit cards in Canada. Just select your province, press the "Apply" button, and then you can compare the cards. Here's another list with some cards that the government missed on their list.

If you’re scratching your head wondering where you’re going to find the money for a cash secured card or eventually increase your cash security to over $1,000, here are whole lot of ideas to help you find the money you need.

What to Watch Out for & Be Aware of with Debt Relief Programs & Solutions in Kitchener

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:

1. There are advantages and disadvantages with all debt relief solutions. If there weren’t, everyone would try to sign up for one. What you need to do is weigh the pros and cons for each option and see what will be best for you to live with in the long run. Also, as someone tells you about a debt relief program, watch out if they spend way too much time talking about its positive aspects. If they don’t take almost as much time to tell you about the negatives, move on and find someone who’s more objective and not trying to sell you something.
2. If the company representative attempting to sell you a program is on commission, or gets a kick back from you signing an agreement or being referred to another business, they could be focusing more on their own financial interests rather than on what’s best for you. This is often true of businesses that only have a few options to offer you.
3. In Canada, there is always more than one way to improve, restore, or fix your credit, and when you look at debt relief options, there are as many as 5 of them depending on your province: the debt management program, orderly payment of debts program, a debt settlement, a consumer proposal, and going bankrupt. So if you're left with the impression that the person or company you are working with isn’t fully exploring all of your options with you or is promoting a particular one over the others (or isn’t even saying much about the others), then you'll probably want to get a second opinion from a professional who will be more objective in discussing the advantages and disadvantages of all your options with you.

How to Fix, Improve or Restore Your Credit Score on Your Own for Free

Paying someone to help you rebuild or improve your credit score is not necessary. We have all of the top credit score tips that actually work right here – completely for free. Take a look. We’ll show you how you can fix your credit fast along with the most effective ways that take more time. Once you’re done with all this, we can then show you how to achieve a super high credit score. If this all seems a bit complicated, your circumstances are unique, or you’d like some personal advice and guidance, there are financial experts in your area who have experience helping people with bad debt – and their help is usually free!

Where to Get Free One-On-One Credit Help Anywhere in Canada to Fix Your Credit Rating

Free Help and Guidance from Local Non-Profits

A lot of people aren't aware of this, but some of the most helpful experts on fixing bad credit situations and totally repairing credit ratings are non-profit Credit Counsellors in Kitchener who offer free, confidential appointments (either over the phone or in person). If you have debts you are having trouble paying or are experiencing financial difficulty, they are the best people to go over your situation with you. Anything you discuss with them is completely confidential. Don’t worry if your situation is really bad. They’ve likely seen far worse, and they are non-judgmental in how they help. Follow this link to locate a non-profit credit counselling service near you.

How to Get Free Credit Score Repair Help in Kitchener 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.

How to Get a Free Copy of Your Credit Report

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

So if you live in Canada and are seriously thinking about finding a credit repair company to help you repair or improve your credit, we think you’d be far better off doing it yourself. Get a free copy of your credit report (and your score if that’s important to you right now). Speak with your banker or a credit counsellor for guidance. Consider getting a cash secured credit card if your banker or credit counsellor recommends it. And follow the suggestions we’ve laid out here as well as the guidance provided in the resources we link to from this page. Credit repair ultimately takes time and patience, but by taking advantage of the resources we point out here, your credit should be re-established and improved as quickly as is possible and you’ll save a lot of money in the process.