Garnet Snively experiences it all the time. People come to buy a car from him at Koncir Automotive in Simcoe, Ont., and he turns them down because their credit rating suggests they're too high a risk. When they get the news, adds Snively, they're usually shocked.

"A lot of people get into trouble with student loans and credit cards and don't realize how much it affects them," he says.

Canadians, it seems, carry increasingly bigger balances on their credit cards - an average $3,000 each, totaling $38.9 billion in 2001, compared to $3.4 billion 20 years earlier. Too many missed or late payments - as little as being three months late with a credit card payment or as much as defaulting on a major loan - on a charge card or a renovation loan and, presto, your delinquency is noted by the zealous folks who keep tabs on the repaying habits of all of us. And that black mark on your credit report, say credit counsellors, is a whopper of a problem that will not quickly or easily go away. Even if there's been a mistake - you did make those payments, for example, but they were never recorded - rectifying it in your favour requires patience, doggedness and a willingness to write lots of letters.

Here's how the system works: this country has two major credit bureaus - Equifax Canada Inc. (1-800-465-7166, www.equifax.ca) and TransUnion Canada (1-866-525-0262 or 1-877-713-3393 in Quebec, www.tuc.ca). Both are provincially regulated, for-profit companies that make their money gathering bits of information about you from various credit grantors (banks, department stores, gas companies, etc.) and then selling it back to those same institutions or companies when they want a big-picture look at your credit history.

By law, you have the right to see these reports, too - at no charge once a year. So if someone like Snively says your credit rating is suspect, then contact both Equifax and TransUnion and ask them to send you a copy of your credit report. On arrival, study it carefully, looking to see if they got it right or wrong.

If they've got it right, that you have indeed been slow to pay down your, say, ballooning Visa balance, then simply putting a cheque for the outstanding balance in the mail won't restore a glow to your tarnished rating. Negative information about your credit habits remains in your file and affects your rating long after your debts are paid.

The only way to restore your credit rating is first to steel yourself for the long haul: for the next six or seven years - yes, that's right, six to seven years, depending on the governing provincial legislation where you live - you must pay all your bills on time. And if you declared bankruptcy, you may have to do this for as long as 14 years. When it comes to credit rating problems, there are no shortcuts.

"You have to remember that the whole system is there to protect creditors and not necessarily consumers," says Pierre Ouellette, executive director of the Ontario Association of Credit Counselling Services. "All you can do with your credit report is make sure it's accurate, you can't reconstruct it." That's why it's so important to understand how the credit rating system works before it's too late.

It's also why you should stay away from companies that advertise "credit repair." In reality, these are scams and you can lose thousands of dollars trying to get an instant fix. "The only thing they can do is correct misinformation, which you can do by yourself for free," explains Ouellette. No one can clear a bad rating off your credit report prematurely, so beware of companies that promise quick fixes and demand lots of money up front. As with most scams, if it sounds too good to be true, it probably is. "A fact is a fact with the credit bureau, and it's not going to change just because you lobby for it," says Ouellette.

If you can't discipline yourself to do it on your own, then contact a reputable, non-profit credit counselling agency (found in the Yellow Pages under credit counselling). Find one that's accredited through an organization such as Credit Counselling Canada or the Ontario Association of Credit Counselling Services that will help you establish affordable, long-term payment plans with your creditors. And even though that won't erase your bad credit history, the fact that you're working with a counsellor will appear on your credit report and may offset your previous delinquencies somewhat. Then keep on top of your bills, paying them no more than one month late (accounts paid on time and those paid one month past due get the same good rating).

If you weren't the cause of your credit problems, chances are there was a mistake in your file. Because credit bureaus get their information second-hand, it's not unusual for reports to contain errors that, unbeknownst to you, may be negatively affecting your rating. If this is the case, write to Equifax and/or TransUnion and ask them to investigate. Unless it's a typo on their part, they'll ask you to resolve the matter with the credit grantor who supplied the information in the first place before changing your file. All the banks and credit companies have web sites with downloadable forms that address problems like this. By law, once they receive your request to investigate an error, they must get back to you within four to six weeks. There's little you can do to hurry this process along, either. But make you sure you send photocopies of the appropriate receipts, payment stubs, etc. that support your case.

If, despite your protests, neither credit grantor nor bureau will change your record, you have the legal right to append a (very) short explanation to that account, saying that you're currently contesting the information the rating is based on, or it was actually a loan your ex-husband took out in your name that you didn't know about, or that the cell phone company's billing department is out to lunch and never sent you invoices, etc. It's not much, but it might be enough for a sympathetic grantor to give thumbs up to your own Garnet Snively and approve the loan you're looking for, which is better than nothing.