One of the primary issues why people can’t get a mortgage and thus need a rent-to-own program is because they have bad credit. What I’m finding is that many don’t know how credit is established and how to repair it. Some don’t even understand what credit is.

Here are five tips to help you repair your credit.

1. Settle disputes with mobile phone companies and other creditors. Cell phone disputes are credit killers. Many people just walk away from disputes. What they don’t realize is that the creditor will report a delinquency to the credit bureau 60 days after they think it’s overdue. (It doesn’t matter what you think). The next month, they’ll report it 90 days overdue. Every month your credit score drops. By the time they report an R9 (9 months overdue), your credit it hooped. And it doesn’t matter if the amount was only $100, or if you thought it was illegitimate. Damaged credit is usually far worse than your loss of pride in paying something you think wasn’t fair.

2. Get at least one credit card (and use it) and one other source of monthly payment that reports to the credit bureaus. Some people think they are being wise by not having credit cards. That might keep them out of the financial trouble that a lack of discipline would otherwise get them into, but it will also ensure that they have a bad credit rating (or none at all, which means rock bottom). And you cannot get a mortgage with only one source of credit, no matter how good it is. Even a gas card counts as a second credit source. An RRSP loan is a great option, too.

3. Pay your bills on time, every time. If you can’t pay the whole bill, pay at least the minimum amount. It will avoid a “late” report by your creditor to the credit bureaus. If you can do more than the minimum, paying the outstanding balance down to below half of your credit limit, that’s even better.

4. Avoid shopping around for credit. Going from place to place to try to get a loan means that each place will be checking your credit score. And each of these official inquiries (hard hits) lowers your score. I’ve seen credit scores that were very bad primarily because of the number of hard hits on the file.

5. Check your own score from time to time and immediately correct any errors you may find. The system itself is not error-free, and they will investigate errors you point out, and correct them if they find your objection to be legitimate. You can access your own score and report (always do both) for free and without the negative impact of a hard hit (It’s called a soft hit). The free report and score will take about three weeks in the mail. For a few dollars, you can get them downloaded immediately. (They have to make their money, too.) Go to to get your score and report.

If you’re a frustrated renter who would like to become a happy homeowner, have some money available for a deposit, but a credit score below 640, then you should consider rent-to-own as a good option.