debtcare.ca

Category: Consumer Debt

  • Rebuilding Credit: Bad Credit Rating Doesn’t Always Just Disappear After a Few Years

    rebuilding credit pngIt is a very common misconception that bad credit just “disappears” once debts are paid and your credit behaviour improves. However, past credit activity doesn’t just evaporate into thin air with a few months (even a few years) of good behaviour. Rebuilding credit takes some work.

    For example, if you file for bankruptcy in January of year one, pay on time, every month, and are discharged in January of year 3, that bankruptcy will remain on your report for 6 years following the date of discharge (January of year 9) – not from the time that you declared.

    When it comes to consumer proposals, these stay on for 3 years following payment in full, as does any credit counselling.

    Periods of inactivity can also impact your credit rating. For example, if a lender assigns debt to collections, this results in activity, and negative activity at that. However, if you don’t have any activity, this is not necessarily a good thing either.

    When it comes to activity, a tip is to continually use credit and to repay that credit on time, all the time. A secured credit card is a good way to do this without being tempted to start relying on credit again or getting back in over your head.

    So, if you have bad credit and want to clean it up, here are a few steps you can take to get the process started:

    • Step 1 – Get your credit report and see what it says. These are available online from both Equifax and TransUnion. Some lenders use one, whereas some look at both.
    • Step 2 – Deal with the bad credit debt on your credit report by paying it off. Better yet, settle it for far less than you owe with a consumer proposal to stop interest and reduce overall amounts.
    • Step 3 – Document EVERYTHING. Any time you settle a debt, get a letter re: settlements and arrangements and copies of proof of your action. It can take some time for these payments to register, but keep on top of it.
    • Step 4 – Make sure the credit reporting agency knows these debts have been paid – don’t count on your lender to tell them. Send the above noted documents via registered mail to ensure they reach their intended destination.
    • Step 5 – Begin the process of rebuilding. Consider a secured credit card to show you are committed to maintaining positive history.

    When it comes right down to it, the only way to improve a poor credit rating is to pay your debts and allow time to pass to show that your payment habits have improved.

    For more information about how to rebuild your credit effectively, call DebtCare Canada today at 1-888-890-0888.

     

  • BOO! Don’t Let Your Consumer Debt Scare You – Fix It!

    Consumer DebtThis time of year it is hard not to find yourself celebrating the scary season, whatever that may involve. However, the scare factor should have everything to do with ghouls and goblins – but nothing to do with your consumer debt. If your debt scares you – no matter what time of year it is – it might be time to consider taking control of your finances and getting out of debt.

    What is consumer debt – is it just debt? Well, no. Consumer debt refers to the debt accumulated through purchases which are consumable or do not appreciate in value. Credit products such as credit cards are the main conduit for this type of debt. Debt from other transactions, such as your mortgage, is not considered consumer debt.

    Consumer debt is often the most troublesome form of debt, especially when it is debt owed on a credit card. This is because of the high interest rates charged by credit card companies. This interest, often around 20%, can make paying off debt very difficult, especially when you can only afford to make minimum payments. Don’t think it is a major issue? Most credit card statements will give you an approximate timeframe as far as when the debt will be totally paid off by paying only the minimum payments. Take a look at that number – it just might scare you into action.

    If you are finding it difficult to decrease your balances, or if you continue to rack them up and then have trouble meeting the minimum payment requirements, a smart idea is to get some help – you don’t have to do it alone. Visiting a debt reduction company with experience helping people deal with debt can help you get things back on track. Your debt reduction solution may involve debt consolidation, credit counselling, a consumer proposal or bankruptcy – it all depends on your individual financial situation. Sitting down with a professional will help you to establish a plan to get things going. This will help to stop or avoid harassing calls from collection agencies and any future (or current) enforcement action, such as wage garnishments or property liens.

    Stop ignoring problem consumer debt – and don’t let the thought of dealing with it frighten you. Get the help you need today to get back on the road to financial success.

    For more information about dealing with your consumer debt please contact DebtCare Canada today by calling 1-888-890-0888 or visit www.debtcare.ca.