Bad Credit - How to re-establish credit

[qadirq]

I have a history of bad credit, and it is following me. I am a new PR, and just landed in the country about two months ago. I have a total of $8,000 as bad credit, since my school days. I finished school and left Canada back in May 2010, at that point of time I had a debt of ~$5,000, but I was not sure to stay in Canada then. I was also unemployed right after school, and never had that kind of money to pay the debt.

Now plans changed, and I am back in the country as a PR. But, I do not have the money to pay back. Recently my branch manager at the bank applied for a visa credit card on my behalf, but I received a rejection letter a rejection letter. The branch manager also received my credit history from Equifax, and we discussed about my credit standings. I have two O9's for a total amount of $8,000. Both the debts were written off and sent for Collections in Jan/2010. It is embarrassing, I know. But what can I do now, I have no money to pay back. I have a minimum wage job.

Can I ever re-build credit and get a car or a house in future? I am considering getting a secured credit card either from Capital One or Home Trust. Do you think this will help me re-establish my credit in Canada? Or this bad credit will follow me rest of my life? I have heard that in about 7.5 years the bureaus do not keep the bad credits. How true is that?

 

[qadirq]

Someone please give your thoughts.

 

[Bargeld]

Get your credit report, try and directly pay back the people who you defaulted on.

Then:

Try and get unsecured cards.. if you can't get them, get a secured card, keep it for a while until a bank offers you an unsecured.

Another avenue is with a bank account, utilize their debit services frequently, get a high deposit authorization amount (which tends to come with a history), put like $10,000 in a savings account with that bank and let it sit there, then apply for an unsecured card.

Plenty of avenues really, but at minimum you should try and pay back what you owe so it doesn't keep getting passed from people buying your debt and passing it along+indefinitely reporting it to the agencies.

 

[on-hold]

I think that this will affect you for the next seven years, or perhaps 7 years from when the incident first appeared on your credit record (probably the latter). There's not too much you can do about it, since the debt was sent to a creditor, the institution wrote it off already and no longer cares if you want to pay it back. Probably the best thing you can do is just to obtain the most basic credit card possible, maybe prepaid, and demonstrate that you will pay it off regularly; same with bills and apartments; build up a balance in your bank and maintain it; and wait until time expunges what's currently on your record. It's unfortunate that your bad credit history was in Canada, since banks here won't look at history outside the borders, even within the U.S.

 

[qadirq]

@Bargeld, @on-hold
Thank you for your inputs.

I defaulted both the debts on Jan/2010 (date it was reported). I have a copy of my credit standings from Equifax, at the moment both the debts are with the collections. My question is- will the two debts be removed from bureau records after seven years, i.e. Jan/2017? Or, the present collectors will sell my debts to another collector and it keeps rolling indefinitely.. so it remains on the bureau records forever?

In the mean time I have applied for a secured credit card with Home Trust by depositing $1,000 as a collateral. It's not been approved yet, I am still waiting on their decision.

 

[Bargeld]

@ Bargeld, @ on-hold
Thank you for your inputs.

I defaulted both the debts on Jan/2010 (date it was reported). I have a copy of my credit standings from Equifax, at the moment both the debts are with the collections. My question is- will the two debts be removed from bureau records after seven years, i.e. Jan/2017? Or, the present collectors will sell my debts to another collector and it keeps rolling indefinitely.. so it remains on the bureau records forever?

In the mean time I have applied for a secured credit card with Home Trust by depositing $1,000 as a collateral. It's not been approved yet, I am still waiting on their decision.

It's only removed in 7 years if there are no updates to that file.

What's done instead is the debt is bought by another collection agency, they try and hassle you for the money instead of the prior agency, and they then continuously report you to the bureaus, so the debt keeps rolling on as long as this process goes. This is called "reaging debt".

If you look at your credit report and see an item, and an agency is trying to contact you about that debt, then ask them if you can get in writing (without offering to pay them money, or even admitting in any way that you owe them) that they'd delete your account or write "paid in full". At that point of a written promise that you have, then negotiate payment terms with them and fulfill it. When you and they both fulfill the promise, depending on what they do or the bureau will let them do depends on the effect. Obviously having it deleted deletes it from your account and the bad credit is wiped out.. but what's more likely to happen is they do paid in full and it's 7 years from them putting that (since that would likely be the last update to the file).

 

[Alurra71]

If they work like they do in the US (same credit reporting companies, Equifax, Transunion, etc) they only need to pay a small fee, like $1 or something similar to keep that record on your file indefinitely. Your best bet is to speak with whomever holds these debts currently as they will usually negotiate a lower price than what is currently listed and usually will do a monthly installment with you if you can not pay the entirety back in one lump sum. This will also help your credit file as they are required to report you for paying if they can report you for not paying. So, even though it looks bad now, within a couple of months it will show that you are in fact paying on the debt which only helps your credit stance.

Good luck.

 

[jatt-going-canada]

What can you do? Pay it off!!