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Category: Credit Score

  • The Complete Guide to Credit Repair for Real Estate Investors

    The importance of a good credit score should never be overlooked or taken lightly. This is more trying for real estate investors. A high credit score means better offers, deals, and money-saving options, which would provide a real estate investor many options to finance properties and manage the mortgage lending process.

    In this blog, we will talk about the impact of credit reports on real estate investors, as well as what to do if you have bad credit, how to maximize credit repair, and how to utilize credit repair service. 

    Why credit score matters

    One of the first few things a lender looks at is a person’s credit report. This is vital to them as the report determines the risks of their investment. A credit report is essentially a statistical method to identify a person’s chances and ability to pay back the money that they borrow.

    The average credit score for a normal real estate loan is 752. Anything about 760 is already considered top tier, which ensures they get the best rates and most choices from lending companies. It’s also inevitable that they get prioritized during the lending process. 

    However, credit scores that fall below 620 are considered subprime accounts, making it more challenging to find a loan provider that could – or would – provide individuals with a good deal for their loan. This is where credit repair comes in.

    Reasons why you need credit repair

    A credit score doesn’t only matter when it comes to real estate or property investment. Here are some valuable information and other reasons that will inspire you to have or maintain a good credit score:

    Better Interest Rates

    Low credit scores often result in higher interest rates, which would mean property loans would have higher interest charges. Having good credit would give you the chance to enjoy competitive interest rates, as well as save on the interest you need to pay.

    Avoid Debt Collector Harassment

    One of the most stressful parts about being in debt is the harassment from debt collectors that come with it. This is inevitable as these agents will do everything they can to get you to clear your debts, such as balances on credit cards. There’s a good chance that if you don’t clear out the issue, your account will be passed on from one collector to another, multiple agents will have your information, and you’d go through the entire collection process all over again.

    Less (or No) Reliance on Co-Signers

    When you apply for a loan but have bad credit, creditors would often require you to provide a co-signer, such as a family member or friend, before you can proceed with your application. But keep in mind, by doing so, you’re putting financial—and perhaps even legal—pressure on them.

    Fund Your Startup Business

    A lot of entrepreneurs looking to start their new business often rely on small business loans to get their venture off the ground. Like with any other loan type, having bad credit can hinder you from getting the funds you require for your startup.

    Rent or Lease an Apartment

    For people who are not yet ready to buy real estate, renting an apartment is the better—and more common—option. However, more landlords are now becoming more particular with who they take on as tenants. Because of this, they’re now performing credit checks to determine the odds of possible late payment from tenants.

    Buy a New House

    Now to the big one—home ownership. This is the dream for most people. Unfortunately, not everyone gets the chance to achieve this due to bad credit. Most banks will reject applicants with disappointing credit, and in the case that they will give these borrowers a chance, they might find the high-interest rate difficult to deal with. However, for those who are looking to sell their homes to buy a new one, getting the help of Trusted House Buyers is a must to ensure better prices and hassle-free processes.

    Credit repair tips for real estate investors

    A good credit report is one of the most important things a real estate investor can ever have. This information can amplify an investor’s chances of getting excellent deals when seeking a loan, such as an attractive mortgage and refinancing fee.

    However, not every optimistic future homeowner has a that can easily be approved for loans. There’s a big chunk of real estate investors who currently need help with credit repair. To help resolve this, we’ve listed down a few essential credit repair tips that every real estate investor should look into:

    Get a Copy of Your Credit Report

    Before anything else, you must first get a copy of your credit report from at least three credit bureaus. The biggest credit reporting bureaus in the United States are Experian, Equifax, and TransUnion. Doing so will allow you to assess your score, compare conflicting information, and see how bad the damage is. By seeing and understanding your score, as well as your credit history, you’ll get a good grasp of where to begin to improve your credit.

    The reason why we recommend that you get a credit report from three different credit reporting companies is that banks usually use more than one credit bureau to review personal credit reports and make lending decisions. Unfortunately, not all credit bureaus have the same updated information. Hence, errors such as work history, date of birth, and paid but not removed debts could harm you.

    Dispute Wrong Information

    It’s important to note that everything on your credit report may not entirely be accurate. Compare your report to your financial accounts, documents, and receipts, and go through everything thoroughly. If there are inconsistencies or wrongful late charges, you must address them right away. Don’t be afraid to dispute anything that you think might be an error. Credit bureaus are required to investigate claims and get back to you within 45 days of your notice as part of their dispute process. 

    Avoid Late Payments

    One late payment can have a huge impact on your score, so you must avoid them at all costs. However, if you’ve recently had delays with bills, you can contact the biller and ask that they remove it. Not all companies would agree to this, but you can try offering a regular payment setup in exchange for their consideration on the matter. Strive to avoid this issue altogether by doing your best to pay your bills on time from the get-go.

    Settle or Pay Down Existing Debts

    As we’ve established, your credit history and existing debt make up your score. Paying off credit card loans and other financial backlogs would greatly help your credit repair process. If you can’t pay these off in one go, you can at least ensure that they’re minimized as much as possible to give you a good chance before you apply for financing in real estate.

    Benefits of using a credit repair company

    Credit repair is not a walk in the park. It’s time-consuming and quite stressful, especially if you’re no credit expert. However, the benefits are all worth it. That’s where credit repair companies come in. These credit repair companies are experts in the field of the credit report, credit repair process, and credit repair organizations act.

    Here are the top reasons why using credit repair services are recommended:

    Expert Advice

    A credit repair company can give you expert credit consultation from the very beginning, as well as guide you through the entire credit repair process. Their objective is to get you out of the financial tangle you may be in. They would look into your credit reports, your accounts, and finances to effectively identify the root of your financial problems. Doing so would allow the credit repair company to provide you with tailored solutions, resulting in more productive consultation.

    Professional Approach

    Credit repair companies have no emotional attachments to you or your situation. However cold that sounds, it would allow them to efficiently guide you on how to make payments. It’s also part of their duty to draft policies and strategies to aid you in managing your expenses to ensure you can fix your credit.

    Connection with Creditors

    Credit repair experts often have better relationships with lending companies. This allows them the flexibility to negotiate on a client’s behalf and makes the entire process easier for real estate investors.

    Comprehensive Knowledge of Laws

    In-depth knowledge and understanding of policies and laws allow credit repair companies to help clients get the best chances. A professional credit repair company is well-versed and compliant with laws, such as:

    • The Fair Credit Reporting Act (FCRA).
    • The Fair Debt Collections Practices Act (FDCPA).
    • The Fair Credit Billing Act (FCBA).
    • Other consumer financial protection statutes that follow policies of the Federal Trade Commission.

    For those who have good credit, ensuring that it’s maintained at a good standing is important. But for those whose credit reports are at a disadvantage, then focusing on credit repair is a must to ensure you can have the best chances when investing in real estate. Using every strategy to repair your credit is essential that includes trusting a legitimate credit repair company with extensive experience.

    DebtCare Canada has a brand new program that places a representative in your corner – someone with the ability to deal with TransUnion and Equifax and have old items removed from your credit report. When it comes to repairing bad credit, call us for help: 1-888-890-0888.

  • FAQ: I want to refinance but COVID-19 has ruined my credit?

    With the pandemic causing business closures and layoffs across the country, many individuals feel that their credit score has taken a hit.

    Where to start?

    While the situation might seem gloomy at the moment, your credit may not be as bad you think it is. The first step towards creating a practical plan of action is getting an updated credit report through Equifax or TransUnion.

    If you have equity in your home, it is also recommended to do a quick analysis of your home’s current worth and how much you own in the mortgages.

    Where do you stand in terms of credit?

    When you have your credit report in your hand, you will see that every credit account, for an individual, is assigned a value between R1 to R9. R stands for revolving credit and the numbers 1-9 are account classifications, based on the notes provided by your creditors.

    If you are between R2-R5, your credit score can recover to an R1 position if you are able to make your payments. Though, if there have been habitual late payments or an R9 rating, your credit is damaged for the next 6 years.

    Where does home equity fit in?

    So, your home equity is the value of your home minus the total outstanding debt registered against the title of the property. Lenders use a calculation called Loan-to-Value ratio and lend on the basis of the equity available in your home.

    Hence, it’s really not about bad credit anymore. The value of your equity determines the options you have when it comes to creating a financial plan to repay your overall debt.

    Many banks and institutional lenders that lend to the public will want you to have decent credit and provable income. Decent credit means a 680+ beacon score. Some of these lenders may lend on slightly lesser scores if you have more equity. You can expect to receive a loan of up to 80% of the home value, less the mortgage balance.

    Trust companies, mortgage investment corporations, credit unions, and private lenders will often lend to people who have bad credit or have difficulty proving income because they mainly lend on the basis of equity. You can expect to receive a loan of up to 65%-75% of the home value, less the mortgage balance. Additionally, these lenders typically lend through mortgage brokers.

    What if I owe more?

    If you owe more than 80% of the value of your property (or close to it), refinancing your mortgage may not be an option for you – but that doesn’t mean its game over in terms of dealing with your debt!

    If you are in a financial crisis and you can’t see a path where a lender will loan you the money to pay off your debt – you can look at other options. There are many federally mandated solutions that protect people in debt and prevent creditors from taking action against them.

    A consumer proposal is an excellent example. In a consumer proposal, an arrangement is made with your creditors where they accept often much less than what you owe, over a period of 5 years. The proposal can help you keep your home, freeze the interest, cease collection action, and enable you to make a single monthly payment that you can live with.

    If you are a homeowner struggling with debt, the best thing that you can do is work with a professional who can assess all the options.

    This can’t happen at a bank or a similar financial institution because they strictly adhere to their predefined lending criteria. A debt consulting company, that also arranges financing, is the best way to go because they are able to present all of your options and help you choose the one that will help you deal with the present crisis while considering your future plans.

    At Debt Care, we work with all types of lenders who will lend under all types of circumstances.

    Contact us today for a free consultation on proposals, bankruptcies, and mortgage refinancing. Call 1-888-890-0888 or visit www.debtcare.ca

  • Protecting Your Credit Score During a Financial Crisis

    If you’ve been relying on credit during the COVID-19 pandemic, your credit score has likely taken a hit. But it’s not too late to resolve the damage.

    Here’s how:

    Step 1: Deal with outstanding debt.

    One of the biggest drains to your credit score is the debt that you owe.

    While your credit score is affected by many factors, one of the most important is your debt utilization. If you are close to your credit card limits or otherwise carrying a high debt load, your credit score will be affected negatively.

    The quickest way to re-establish credit — and the first step — is by taking care of this debt.

    This can be accomplished by budgeting or by looking at debt consolidation methods, like settling your debts, a debt consolidation loan, mortgage refinancing, and more.

    A debt counsellor can help you review your options.

    Step 2: Make a plan to pay existing bills on time.

    The second step to repairing credit damage is to practice good credit habits. This means paying your bills on time and in full.

    This will have a bigger impact on your credit score if you have already cleaned up your outstanding debts (which is why it’s step 2).

    Outline exactly what you owe and when it must be paid and take caution to ensure that all bills are paid every month in full.

    What if you can’t do these two steps?

    If your debt load is so high that you can’t commit to these two steps, then it’s time to consider other options.

    Depending on how much debt you are carrying, it might be necessary to file for insolvency — bankruptcy or consumer proposal.

    While this will harm your credit score, if it is the only way to resolve unpaid debts then it may be necessary — and you can work to rebuild credit after you file.

    The important thing to keep in mind when considering insolvency is that you need an ally on your side to make sure you stay protected.

    Our DebtCare Canada team can do that and review your credit options to ensure it’s the right choice for you.

    We also offer a credit repair program that deals with:

    • Errors on your credit report
    • Old items continuing to report
    • Duplicate items reporting
    • Disputes
    • Past bad credit – late payments, defaults, bankruptcies
    • Rebuilding credit after bad credit history
    • And more…

    We help you repair your credit – hassle-free.

    Learn more about your options today. Call or text 1-888-890-0888 for a free consultation or visit www.debtcare.ca.

  • If I File for a Consumer Proposal Does It Mean I’m Bankrupt?

    If you file for a consumer proposal does it mean you’re bankrupt?

    It’s a common question we receive, but the short answer is NO.

    While both programs are administered under the Insolvency Act, filing for a consumer proposal and filing for bankruptcy are two different things. Filing for a consumer proposal doesn’t mean you’re bankrupt, just as filing for bankruptcy doesn’t mean you’re in a consumer proposal.

    And both have different implications for your credit score.

    When you file for a consumer proposal, you are given an R9 credit rating while in the proposal (this is the worst credit rating you can receive). However, once your proposal is paid off, you are upgraded to an R7.

    The R7 stays on your credit report for three years from completion. So, in three years, your credit will be clean. You can pay off your consumer proposal in anywhere from one month to five years. This could mean your credit score is clean as soon as three years and one month after filing!

    Bankruptcy is a little different. When you file for bankruptcy, you are given an R9 rating that stays on your credit report for seven years after completion. First time bankruptcies can be paid off in nine-to-21 months, so the R9 rating would stay for seven years after that.

    A consumer proposal allows you to rebuild credit faster, particularly if you can pay it off quickly.

    That’s where working with financial counsellors, like DebtCare Canada, comes in. We can help you decide which is best for you — filing for a consumer proposal or filing for bankruptcy — and make sure you are protected along the way.

    We are on your side and will work to secure you the best deal possible in your consumer proposal or bankruptcy.

    If you’re thinking of filing for either, contact us first for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • By the Numbers: What is a Bad Credit Score?

    Your credit score is very important. It represents how lenders perceive you as far as risk and impacts how likely you are to obtain various credit products. If you’re concerned about your credit, you may be wondering what a bad credit score is – and so today’s blog should help you better evaluate your own situation.

    A consumer credit score, also known as a FICO score or Beacon score, ranges from 300 to 900. According to TransUnion, a score above 650 will likely qualify you for a standard loan while a score under 650 will typically make receiving new credit difficult. These are the typical ranges:

    • 750+ Excellent
    • 680+ Good
    • 600-680 Fair
    • Below 600 is not good

    One of the quickest ways to get a bad credit score is to default on your current debts. Missing even one payment can be detrimental. Also, if you have defaulted on numerous accounts, you may not actually remember everything you’ve missed (phone bills, utilities, and other products that are not loans and credit cards), meaning they often get lost in the shuffle, further impacting your credit score.

    Building great credit takes work, but breaking down that great credit can be swift and long-lasting. Once credit has been destroyed, you may want to throw your hands up in the air in defeat, but don’t give up –recovering from bad credit is not as painful as you might think.

    If you’re ready to rebuild, there are certain steps that you can take to get the process started. Begin by getting your credit report to better understand what’s listed there and what you owe. Get it from both credit reporting agencies – Equifax and TransUnion.

    The next step, and arguably the most important step, is to deal with past debt. Obviously, if you had the money to pay these past due balances, you would have done so, but ignoring them further just exacerbates the issue. Speak to a financial consultant who specializes in this area to get support concerning options to clear bad debts.

    While dealing with a bad credit score and rebuilding credit, a secured credit card is a great way to build things up.

    Also, remember not to repeat past bad habits. As you rebuild credit, don’t max out new credit, make late payments or go crazy applying for credit everywhere. These are all red flags for lenders and work towards bringing that credit score back down. Try to keep your limits at 50% of your available credit (or less) and make more than the minimum monthly payments.

    At DebtCare, we understand how difficult it can be when you’re sitting with a bad credit score. If you’re struggling to deal with your debt, we can help.

    Call us today for a free consultation: 1 (888) 890-0888.

     

  • Credit Reports 101 – The Credit Score Range and You!

    debt1Your credit score is important. We all know this. Most of us also know why – it indicates the level of risk you present to lenders when applying for various credit products, including mortgages, car loans, personal lines of credit, credit cards, even insurance. What many people are not as sure about when it comes to credit reports is the credit score range and what the items on your report mean.

    Simply speaking, a credit score range is the range of numbers that makes up credit. The credit score range is from 300-900 – 300 representing the worst credit and 900 the best.

    Lenders say Beacon score, Equifax tells consumers FICO score – both of these mean credit score. Within your credit report there are ratings that make up your credit score.

    Here are some of the basics:

    • Each credit product will have a letter:
      • I = Installment credit like a loan
      • R = Revolving credit like a credit card
      • O = credit like cell phones
    • When you have a 1 rating, e.g. R1, this means that your account is up to date and paid as agreed
    • If your rating is 2-5 you are 30-150 days in arrears
    • If your rating is 7 you are in credit counselling
    • If your rating is 8 you have had a vehicle repossession
    • If your rating is a 9 you have gone 6 months in arrears and are considered a bad debt write-off

    These ratings will contribute, along with other things such as credit amounts and balances, to your credit score. They help lenders determine your credit behaviours and what your behaviour will likely look like if they extend credit to you.

    Now where does your credit score fall in the credit score range:

    • Under 500 – really bad credit
    • Under 550 – bad credit
    • Under 600 – not good credit
    • 620 and up – you may be approved for a CMHC insured mortgage
    • 680+ the bank will likely give you unsecured credit

    680 is what you should set as an initial goal. Anything above this usually indicates that you have positive credit history and good credit behaviour, and thus present less risk. Lower risk usually means a higher chance of obtaining credit and often a lower rate of interest.

    Ok, so you’ve determined that your number is in the 500 – lower 600 range. How can you get that score up? Rebuilding credit takes time, but it is possible.
    Here are some tips.

    • Get rid of some of your debt. Credit balances at or just below maximum are going to bring that score down, so work on paying off those debts.
    • Make sure that you are making at least the minimum payment, on time, every month, for every product. Keep in mind that just paying the minimum balance, while it will help rebuild credit history, will not really help you pay off debt as these minimums are usually little more than monthly interest.
    • Stop applying for new credit. Any time a lender pulls your credit report, a request for a new credit card will show on your report. Too many and you look like a credit seeker, someone who is living beyond their financial means.

    Credit reports and the credit score range can be confusing, but once you’ve figured out where you sit on the scale, you can work on rebuilding credit if it isn’t up to par.

    DebtCare can help. Call us today at 1-888-890-0888.

     

     

  • Be in the Know: Checking and Understanding Your Credit Score

    Credit ScoreNo matter the state of your finances, understanding your credit score is a very important part of keeping financially fit. This is especially important when you are dealing with debt or attempting to rebuild credit.  Not knowing what certain aspects of your credit score represent can lead to trouble acquiring credit products, or errors not reported can be incredibly difficult to deal with.

    Understanding your credit score. Firstly, what is your credit score? This is the number applied by one of the major credit reporting agencies, derived from a complex calculation of your financial behaviour, most importantly your borrowing behaviour. This includes where you have borrowed from, how much you have borrowed, and your repayment habits. Credit products such as credit cards, personal loans, mortgages, car loans, even personal cell phone contracts are included in this calculation.

    So what does the score mean? When you (or a potential creditor) request your credit score, this is the number that represents those above calculations. Your number will be on a scale from 300 to 900. 300 is the lowest score, and represents credit that is in very poor standing. 900 is the highest score, and represent pristine credit behaviour.

    This is how national credit reporting agency Equifax ranks scores:

    –        300-559 – poor
    –        560-660 – fair
    –        660-724 – good
    –        725-759 – very good
    –        760+ – excellent

    Your credit score will fall into one of these 5 categories, and it is based partially on this number that a creditor will decide whether or not to extend credit to you.

    What impacts your credit score? Anything that you do financially with regard to credit gets reported. This includes any new credit products you obtain, payments made and payments late or missed, any credit inquiries made both by you or a potential creditor, as well as any debt reduction strategies, including claiming bankruptcy or a consumer proposal.

    Once you are better equipped to understand your credit score you might be concerned about what this number means. But don’t worry. If your credit score is less than stellar you should work on changing this – it just might mean seeking out some help. Getting rid of debt and ensuring that your monthly financial obligations are met – on time, every month – is a great place to start. Halting any further credit seeking is also a good idea.

    Your credit score changes all the time, based on how you behave credit-wise, so be sure to keep that in mind. If you need help getting that number back up, or want help getting rid of your debt so that you can focus on increasing your score, consider working with a professional debt solutions company.

    For more information about understanding your credit score and how to get it out of the red please contact DebtCare Canada today by calling 1-888-890-0888.

  • How to Check Your Credit Score?

    In Canada, a credit Check Your Credit Scorereport and credit score is used by many different institutions, including banks, credit agencies, and even employers. These documents contain important information about your borrowing and repayment habits, and provide a detailed account of your past financial history. Even though these reports are so important, many Canadians are not familiar with the process of requesting and understanding the credit score.

    Understanding your credit score is important for a number of reasons. One of the most important is because, whenever you apply for credit, be it a mortgage, automotive financing, or a credit card, your credit report is pulled by the lending institution and assessed. In order to qualify, you must meet certain qualifications with regard to the report, and so knowing where you stand is crucial.

    What if your credit score is less than stellar? Too much credit, being too close to your limits or too many late or missed payments can severely reduce your credit score.

    In order to bring the score up, it might be prudent to speak with a financial debt consultant to discuss some options to reduce your debt and regain those lost credit points. Debt consolidation or consumer proposals are great options to help you get rid of your debt.

    So, do you know how to check your credit score and credit report? Here is some important information that will help.

    Requesting your credit score is actually quite simple. There are a few different credit reporting agencies in Canada, but the most popular are TransUnion and Equifax. Both of these agencies provide online copies of your credit report and credit score for a fee – simply visit the website, enter in some identity confirming information, and you will be able to print your credit report and credit score.

    Another reason that it is important to understand how to check your credit score and credit report is to make sure that everything it contains is accurate. Credit reporting agencies can make mistakes when compiling the information, and if something is reported incorrectly this can harm your overall credit. It is important to check your report regularly in order to find any mistakes and remedy them. That being said, when a mistake is brought to the attention of a credit reporting agency you may find yourself frustrated by the amount of back and forth that takes place. If you find yourself having a hard time dealing with those credit reporting agencies and their unwillingness to accept responsibility or fix the incorrect data, contact a financial consultant who can help get the issue resolved.

    If you want more information about how to check your credit score and how to understand your credit report, please contact DebtCare Canada by calling 888-890-0888 or visit www.debtcare.ca.