How to rebuild your credit score

Rebuilding your credit score is simple, but it takes some time and commitment.

Updated

If you find yourself with a bad credit score, rebuilding it is important if you plan to get credit and affordable financing in the future. Fortunately, rebuilding your credit is not particularly difficult – however it does take time, some money and plenty of effort.

How to rebuild your credit score

There are a variety of ways to improve your credit score including:

  • Review your credit report. Obtain a free copy of your credit report and make sure it’s accurate. Check for any errors – and report them to the credit bureau – as they’ll likely be bringing down your score.
  • Pay your bills on time and in full. Paying your bills on time is one of the best ways to increase your credit score. Paying them in full can help you build up your score even more, showing lenders you’re responsible with credit.
  • Reduce your existing debt. Pay down your debt in order to increase your credit utilization ratio. This essentially means you’ve got access to more credit, but are only using a portion of it. Try to get your ratio under 30% to increase your credit score.
  • Avoid closing old accounts. The length of time that you have credit accounts open affects your credit score. The longer you have accounts open, the better your score will be.
  • Avoid applying for new credit products – unless you’re going to be responsible. Every time you apply for a new credit product, a lender typically does a “hard pull” on your credit report in order to check your score and credit rating. Each time this happens, your score drops a few points. However, if you’re going to apply for a new product to help increase your score (and your credit utilization ratio), you’ll need to pay back the balance on time and in full to ensure you actually help your score – and not hurt it.

Get your credit score or rebuild your credit

Name Product Starting price Trial period Price per month Credit scores Credit monitoring Credit reports Update frequency
Credit Verify
$1
7 days
$29.95
TransUnion
Yes
TransUnion
Monthly
Instantly access your credit score and report online and get daily alerts and updates. Plus, premium members get $25 in bonus rewards every month which can be used towards discounts on everything from shopping and entertainment to dining and travel.
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Compare up to 4 providers

Name Product Price per month Credit scores Credit monitoring Credit reports Update frequency
Score-Up
$49.99, $66.99 or $99.99
TransUnion
Equifax
Yes
TransUnion
Equifax
Monthly
Score-Up uses software to help you build or rebuild your credit score. Set targets, access your credit score anytime, monitor your progress and find out what actions you should take to increase your score as quickly as possible.
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*The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.

How loans and credit cards can help

You can potentially rebuild your credit using a secured credit card or a short term loan, provided you play your cards right. There are risks involved with both options and you have to be certain you’re going to make your repayments on time and in full. Before applying for a secured card or loan, find out if the lender will:

  • Offer credit education. Find out if the lender offers education into managing money and budgeting, so you can learn about the factors that actually affect your credit score and how you’ve gotten yourself here in the first place.
  • Report repayments to the credit bureaus. Not all lenders will report timely (or untimely) repayments to the credit bureaus. Consider speaking to your lender about the reason you’re taking out the secured card or loan so that you can increase your credit score by making timely repayments that the credit bureaus will actually find out about.

Can you rebuild your credit with a secured credit card?

One of the cheapest ways to increase your credit score is to use a secured credit card. These products usually come with a small monthly or annual fee and a small credit limit, however these cards can help increase your credit score – as long as you pay back your balance on time and in full.

Lenders that offer secured credit cards typically report your on time payments to the credit bureaus, which can help you build up your score over a period of time.

Compare secured credit cards

Name Product Required Deposit Purchase Interest Rate Cash Advance Rate Annual Fee Reward
Refresh Financial Secured Visa Card
$200 - $10,000
17.99%
N/A
$12.95
Take advantage of a low annual fee, with no credit check and guaranteed approval once you secure your credit card with some funds.
Take advantage of a low annual fee, with guaranteed approval and no credit check.
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*The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.

Can you rebuild your credit with a credit builder loan?

Using a credit builder loan can be an effective way of increasing your credit score and rebuilding your financial health. While some credit builder loans have high interest rates, it’s possible to find rates and terms that are competitive – but watch out for any one-time administration or legal fees.

Lenders that offer credit builder loans will report your payments to the credit bureaus, which can help you almost immediately start improving your credit score – as long as you make on-time payments.

Compare credit builder loans

Name Product Interest Rate Max. Loan Amount Loan Term Fees Min. Credit Score
Marble Fast-Track Loan
18.99% – 24.99%
$15,000
36-84 months
Legal and admin fees of $295 - $1,500 (based on size of loan)
300
Marble Financial offer credit builder loans in amounts from $2,500 to $15,000. Improve your financial health within 36 months. This loan is strictly for borrowers exiting a consumer proposal.
Refresh Financial Credit Builder Loan
19.99%
$25,000
3-5 years
No administration or origination fees.
300
No funds are provided by Refresh upfront. Instead, funds are placed into a secured account to be accessed later. Your payments are reported to the credit bureaus, potentially impacting your credit score.
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Compare up to 4 providers

*The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.

Can you rebuild your credit with a payday loan?

Short term lenders follow less stringent lending criteria, which is why they provide loans to individuals with poor or bad credit scores. When you take out a short term loan to improve your credit score, you’ll have to repay it on time in order to achieve your goal. Upon successful repayment of your loan, you can expect your lender to report your timely repayments to the major credit bureaus: Equifax and TransUnion.

While short term loans give you the ability to repair your credit rating to some extent, they can also greatly damage your score if you don’t make your repayments on time. You’ll also need to take out repeat loans since it’s going to be a long process to rebuild your score. This also means its going to be an expensive process in the short term – and probably not worth it.

⚠️ Warning: Be cautious with payday loans

Payday loans are expensive. If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call Credit Counselling Canada from 8:00am to 5:00pm Monday to Friday at +1 866-398-5999.

Consider these alternatives before applying for a payday loan:

  • Contact your creditors. Speak with creditors or your electricity, gas, phone or water providers about extending payment due dates or working out a new payment plan.
  • Consider a personal loan. A personal loan usually comes with much lower interest rates than a payday loan.
  • Pay with credit card. While not a long term solution, paying with credit card can help cover emergency expenses. You’ll need to pay off the balance before it accrues interest.

Compare payday loans

Check the websites of any lenders you’re interested in to confirm they operate in your province or territory of residence.

Name Product Max. Loan Amount Serviced Provinces/Territories Turnaround Time Loan Term Interest Rate
Cash Money Payday Loan
$1,500
Nova Scotia
New Brunswick
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
In as little as 15 minutes with INTERAC e-Transfer® if approved
12-14 days. Varies by Province
Varies by Province
Apply for your first $300 payday loan at a $20 borrowing cost (excludes Alberta, Manitoba, New Brunswick or Saskatchewan applicants). Residents of Manitoba and New Brunswick cannot apply for a loan online (must apply in-store).
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Compare up to 4 providers

*The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.

Bottom line

Rebuilding your credit score will take a lot of time and effort – but the end result will be well worth it. You’ll be eligible for many more credit products – and with much more competitive rates and terms – which can help you reach your goals, whether that’s buying a home, purchasing a new car or applying for a premium credit card.

Frequently asked questions

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