Bruised credit

With a score like this, can anything be done?

Yes, usually not with the same tier of lender.

Mainstream banks generally have a score floor, and below it they stop. A second tier, usually called alternative or B lenders, keeps reading: what happened, when it happened, and whether things have been normal since. Whether it gets approved depends on the whole file.

Is the score the only thing a lender looks at?

No. Most lenders read the story in the report, not just the number at the top.

The same score can be two completely different files. Problems clustered around a separation two years ago with clean payments since is not the same as missed payments last month. An illness, two hard years in a business, a customer who never paid — the report shows the result and never the reason. Somebody has to write the reason down. That part is my job.

Which items get in the way the most?

Generally the recent ones, and the ones tied to housing or the government.

Missed mortgage or rent payments, accounts in collections, judgments, and money owed to CRA tend to matter most. With a bankruptcy or a consumer proposal, what counts most is how much clean credit you have rebuilt since discharge. A credit card paid a few days late carries less weight than most people assume.

What is an alternative lender, and how much more does it cost?

More, and I will not dress that up: a higher rate than a mainstream lender, usually a lender fee, generally a one or two year term, and often a larger down payment.

What you get for it is a lender that reads the whole file. It is a trade of money for time, and whether it is worth it depends on whether you can fix what needs fixing inside that time. If you cannot, it is not a bridge, it is a delay. I say that out loud before you sign anything.

How do you move from an alternative lender back to a mainstream one?

With one to two years of a clean record, and a fresh application at renewal.

The exit plan is part of the decision on day one. The work during that stretch is specific: never a late mortgage payment, balances down, no new debt, tax filings caught up if that was the issue. A few months before the term ends I go back to the market for you. Whether it lands depends on the file, but nobody should walk in without the plan.

How long does it take for a score to come back?

Bringing balances down usually shows up within a month or two. The negative entries themselves take years.

Generally, negative information stays on a Canadian credit report for around six years, with some variation by province and between the two bureaus. But the weight fades with time. An entry from three years ago and one from last month are not the same thing to a lender. You do not need it to disappear. You need it to get old.

Should you fix the credit first, or buy first?

It depends on which step is stopping you, and on how much time you have.

If the gap is small and a few months would close it, waiting is usually cheaper. If the gap is large, or you have already signed a contract and the clock is running, it is a different calculation: solve what is in front of you, then plan the move back. That decision deserves actual numbers, not a hunch.

Three things you can do this week

First, pull your report from both Equifax and TransUnion and read them yourself. The two often disagree, and most people only check one. Checking your own is a soft inquiry and does not affect your score. If you see an account you do not recognize, or an old item you already settled still sitting there, it can be disputed.

Second, bring every card's balance down rather than clearing one card entirely. Generally, lowering utilization across all of them moves faster than emptying one. Third, do not apply for a new card, a car loan or buy-now-pay-later for the next few months. And if you have an account in collections, ask me before you pay it. The order and the timing of that payment affect how the file gets submitted.

Common questions