Why You Actually Don't Need A Credit Repair Consultant To Fix Your Credit in Canada

By Julien Brault, founder of MooseMoney.

You can rebuild your credit in Canada without paying a credit repair company a single dollar. Credit repair agencies charge hefty fees for services that you can perform on your own, and some of them promise results that are literally impossible to deliver.

The credit repair industry in Canada operates in a grey area that often catches financially stressed consumers off guard. Some of these companies claim they can remove negative information from your credit report, which is something no one can do if that information is accurate. Julie Kuzmic, Head of Consumer Advocacy and Compliance at Equifax Canada, put it plainly: "There are a lot of credit repair agencies out there that are offering services to consumers that they actually cannot deliver on."

The good news is that you have every legal right to dispute inaccurate information on your credit file at no cost. Kuzmic confirmed this directly: "All consumers have the right to update information on their own credit reports and it's generally easier for an individual to do that directly with the credit bureau rather than going through a third party like a credit repair agency. We generally advise people to come to us directly. Any inaccurate information will be investigated and removed for free if we can confirm it's inaccurate."

If a company asks you for an upfront payment before doing any work, that should be an immediate red flag. Requesting upfront fees for credit repair services is even illegal in Ontario, where the law prevents credit repair agencies from charging any fee until their clients’ credit score has actually improved. Other warning signs include promises to "erase" negative credit history, pressure to avoid contacting the credit bureaus directly, suggestions to add false information in a credit application, and instant approval offers for loans without reviewing your financial situation.

How to Rebuild Your Credit on Your Own

Start by requesting free copies of your credit report from both Equifax Canada and TransUnion. You need both because lenders report to them independently, and discrepancies between the two are common. Review every entry for late or missed payments, your current debt utilization rate, all open accounts, and any errors. If you spot an inaccuracy in your credit report, file a dispute directly with the bureau that holds the incorrect data. You will need documentation to support your claim, so gather any payment confirmations or account statements before you submit.

Next, focus on the behaviours that actually move your score. Payment history is the single most important factor in your credit score, so you should make at least the minimum payment on every account by its due date every month. Your credit utilization ratio, which is the percentage of your available credit that you are currently using, should stay below 30 percent. If you have $10,000 in available credit, try to keep your balances under $3,000. Keeping it even lower will help more.

Avoid applying for multiple new credit products in a short period. Each application triggers a hard inquiry on your file, and several hard inquiries clustered together can drag your score down. As a result, if you need a new credit card, only apply for a card that will pre-approve you through a soft credit check (which does not impact your score) before performing a hard check. 

If your credit is too damaged to qualify for a traditional credit card, a secured credit card can help you start building a positive history. Products like the Secured Neo Mastercard require a refundable security deposit that sets your credit limit, and your payment activity gets reported to the credit bureaus just like any other card. 

Richard Godyer, Chief Credit Risk Officer at Neo Financial, offered a realistic perspective on the process: "I think that the steps towards rebuilding your credit are pretty simple and straightforward and I think lots of people can do it on their own by reading the Neo blog or other free content online. However, if you are somebody who needs help and support, you may benefit from having someone in your corner who's going to make sure you do the things you need to do to rebuild your score."