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Category: DebtCare

  • Protecting Your Home Through Financial Restructuring

    Having financial troubles can be stressful no matter where you are in life – but it’s doubly so if you own a house.

    There’s a common fear that financial restructuring will mean losing your home. Fortunately, there are ways to protect against this.

    The first thing to do is to make sure that you stay up-to-date with your mortgage payments. If you haven’t defaulted on your mortgage, your chances of keeping your home through a financial crisis increase greatly.

    Let’s look at some of the financial restructuring options you might have when you own your home…

    1. Debt Consolidation

    As long as your mortgage payments are up to date, a debt consolidation loan can be a good way to deal with outstanding unsecured debt.

    Unsecured debt might be credit card bills, lines of credit, your cell phone bill, etc. It is anything not tied to collateral – so your mortgage and car loan would not fall under this umbrella.

    Unsecured debt usually has a high interest rate, making your monthly payments even more expensive. This is where a consolidation loan can help. You can use the money to pay off your unsecured debts, and then pay back the consolidation loan at a fixed interest rate over a manageable schedule.

    You won’t be paying as much in interest, so you can use the extra money to keep your mortgage payments up to date.

    1. Home Equity

    Sometimes your home can actually be a source of income for financial restructuring. If you have equity available, you might be able to use it to pay off your outstanding debts – essentially, this is a form of a consolidation loan.

    Again, this is dependent on your mortgage payments being current and made on time every month.

    1. Filing for a Consumer Proposal

    If you don’t have enough equity available or aren’t eligible for a consolidation loan, filing for a consumer proposal is another option.

    Consumer proposals deal with unsecured debt up to $250,000 (excluding your mortgage). In a consumer proposal, you make an offer to your creditors to settle your debts for less than what you owe. This offer must be accepted by the majority of your creditors and you must be able to prove they’ll get more money than they otherwise would if you filed for bankruptcy.

    In most cases, you can keep your home when you file for a consumer proposal, as your assets remain untouched. Again, this depends on your mortgage payments being kept up to date and is based on you having enough income to continue paying your mortgage after the proposal.

    A good financial advisor will structure your consumer proposal based on equity.

    If you have more than $250,000 in unsecured debt, you might file for another kind of proposal or bankruptcy instead.

    1. Filing for Bankruptcy

    Filing for bankruptcy is where most people fear they will lose their home. This is because in a bankruptcy, assets are often sold to pay off debts – including in some cases your house.

    However, this doesn’t always happen – and you may able to keep your home depending on the amount of equity you have available.

    If:

    • You don’t have much equity (this varies depending on province), and
    • Your mortgage payments are up to date

    your ability to keep your home increases substantially.

    If you do have a lot of equity, you may still be able to keep your home by repaying your equity through borrowing money, or through a second mortgage.

    A good financial advisor, like those at DebtCare Canada, will also help you structure your bankruptcy based on equity.

    1. If You Can’t Afford Your Mortgage…

    As we’ve discussed, keeping your home through financial restructuring largely depends on being able to continue making your mortgage payments.

    If your mortgage is up-to-date, you’re less likely to lose your house. But what if even after consolidating debt and making a budget you don’t have enough income to make your mortgage payments?

    This can be a whole other issue – but it’s important to remember that you still have options. You might need to:

    • Make more income through asking for a raise or getting a second job.
    • Or sell your home and downsize to a smaller mortgage.

    While selling your home may not necessarily be the same thing as keeping it, it can be preferable to losing your home through having it seized. In this option, you would still retain the profits from the sale, and you could use the money to move into another, less expensive property.

    A good financial advisor, like the ones at DebtCare Canada, can help you sort through your financial restructuring options, so your home is protected.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • A Consumer Proposal is One Way to Stop a Wage Garnishment Dead in its Tracks!

    How do you stop a wage garnishment?

    If your paycheque is being targeted by creditors, it’s a critical question to ask – and we have the answer.

    Stopping a wage garnishment immediately is vital to your financial health:

    • A wage garnishment removes a percentage of your paycheque automatically.
    • It can be embarrassing – your employer (or clients if you’re self-employed) will find out that you are being garnished.
    • And it can put you in even more debt if you can’t afford your other expenses because of the garnishment.

    Luckily there are ways to stop a wage garnishment in its tracks. One of these methods is by filing for a consumer proposal.

    In a consumer proposal you make an offer to your creditors to settle your debt for a lower amount than you owe. The majority of your creditors must accept your proposal and they must think that it is more beneficial to them than if you were to file for bankruptcy instead.

    To qualify for a consumer proposal, you must:

    • Have less than $250,000 in unsecured, non-mortgage debt.
    • Be able to demonstrate your ability to repay at least a portion of your debt.

    Benefits of filing a consumer proposal:

    • It stops collection actions by creditors – including wage garnishments.
    • As long as the majority of your creditors accept the proposal it is binding on all creditors whether they voted against the proposal or not.
    • In most cases you can keep your home, car, and investments.
    • It allows for one low, interest-free monthly payment.
    • It can be paid in full at any time, at no additional cost.

    A consumer proposal stays on your credit rating for three years from the date it is paid in full as opposed to a bankruptcy that will remain on your credit for six years from the date that it is discharged.

    How to file for a consumer proposal:

    A consumer proposal is filed by a Licensed Insolvency Trustee (LIT) – formerly known as a Bankruptcy Trustee. But it’s important to note that LITs represent both you and your creditors and they are paid on a percentage of the consumer proposal they negotiate. The larger the settlement, the more money they make.

    We recommend working with an independent financial advisor who is strictly on your side to advocate for you throughout the consumer proposal process. At DebtCare Canada, we do just that. We perform an independent review of your financial situation and make practical recommendations that will work for you.

    If a consumer proposal is your best choice, we will work with you and structure the terms of your proposal before you meet with an LIT. With our assistance we will schedule a meeting with a Trustee and negotiate on your behalf as well as supervise the entire process.

    Stop a wage garnishment today. Contact us to get started. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Don’t Wait Too Long to Refinance Your Mortgage – Get Ahead of Rising Interest Rates

    If you’re interested in refinancing your mortgage, it’s better to act sooner rather than later.

    Why? Let’s break down the reasons.

    1. New Canadian mortgage regulations are making it harder to access financing.

    On January 1, 2018, the Canadian government implemented new mortgage rules onto federally-regulated lenders (such as banks). These lenders now have to implement a mortgage “stress test” on potential homebuyers, and those seeking mortgage refinancing.

    What this means is that if you were to get a new mortgage, or refinance an existing one, a federally-regulated lender would need to test your ability to afford the mortgage against a higher mortgage interest rate.

    If you had a mortgage rate of 3%, they might have to test your ability to pay against a 5% rate, for instance. They are also required to take your total housing-related debt (Gross Debt Service ratio – or GDS) and your total overall debt (Total Debt Service ratio – or TDS) into account.

    However, non-federally regulated lenders, like credit unions and private mortgage lenders, are not subject to the mortgage stress test regulations. Unlike big banks, they aren’t required to stress test your mortgage refinancing or take your GDS and TDS into account – but that could be changing.

    Earlier this year, a Reuters article cited three unnamed federal sources who said that the Canadian government is considering extending the stress test regulations to private lenders. This means that non-bank mortgage lenders would be required to use the same measurements for extending mortgage financing as the big banks.

    Canadian Finance Minister Bill Morneau denied the rumours, but the possibility is still there – and if it does happen, you’ll want to be prepared. Which is reason #1 why it may be better to seek mortgage refinancing now, rather than later.

    1. Property values are declining.

    Reason #2 has to do with value of your property. If you’re refinancing, you likely want to access the most equity possible.

    Unfortunately, home prices are rising slowly, perhaps due to the impact of the mortgage stress test and Canadian interest rate increases. And less homebuyers are able to access the market.

    More than 100,000 Canadians have been kept out of the housing market due to the stress test regulations, according to Mortgage Professionals Canada.

    If you’re thinking of refinancing your mortgage and this trend continues, it might mean that your property value could drop, too. And if private lenders are subjected to the same regulations, it could mean even less people entering the housing market – and even further property value declines.

    1. Mortgage rates are rising.

    Five-year fixed rate mortgages reached their lowest point in late 2016, according to Rate Hub. Since then, mortgage rates have gone up about 0.5% per year. At the beginning of 2019, the lowest fixed rates were around 3.29%.

    Variable mortgage rates are also on the rise (and subjected to Canadian interest rate increases).

    “Even with discounting, the best five-year variable mortgage rates are still up about 0.75% since this time last year,” says Rate Hub.

    The moral of all this is that if you’re considering mortgage refinancing – don’t wait.

    At DebtCare Canada we offer first mortgages, second mortgages, home equity lines of credit, and more.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Housing Affordability Crisis in the GTA: How to Find Other Savings in Your Budget

    Housing affordability in the GTA is close to the worst it’s ever been.

    According to the RBC Housing Trends and Affordability report, a household in Toronto would need 66% of its income to cover housing-related expenses. And the difficulties continue whether you’re looking to own a home or rent.

    • First-time homebuyers have to pay a higher cost to get into the housing market in the first place. Even relatively more affordable options, like condos, have gone up in price recently.
    • Renters are paying more in rent. According to RBC, rental rates in Toronto have gone up 4.4% in the past three years.
    • Even GTA residents who already own a home may be struggling as housing costs go up or if they are scheduled for mortgage renewal.

    Whether you’re a renter, shopping for your first home, or a homeowner, the housing affordability crisis likely isn’t going away anytime soon – but there are solutions to be found in your own pocket.

    These money-saving tips can help you put more into your housing budget, save for a down payment, or pay off debt that may be affecting your ability to get a mortgage.

    Here’s what we recommend:

    1. Get a roommate.

    If you are currently renting, you may already have a roommate. But if you don’t, finding one can be a good way to save on costs – especially if you are hoping to save up to buy a house.

    If your rent is $2,000 per month and you split that in half with a roommate, you’d be saving $1,000 each month – or $12,000 each year.

    Even current homeowners may benefit from having a roommate to share housing costs or looking into co-ownership, where two or three friends buy a house together. While you may have less privacy, you’ll be able to afford more home.

    1. Negotiate your lease or mortgage renewal.

    For tenants, you may be able to work out a deal with your landlord. If you’ve been a good tenant and have a history of paying your rent on time and in full, your landlord may be keen to keep you. You might be able to negotiate a break on rent for your good behaviour, or for doing something extra in the complex – like shovelling the driveway in the winter.

    For homeowners, when time comes for your mortgage renewal, ask your broker or lender if there is a way to save on your rate. You might benefit from a lower rate or by switching to a fixed-rate mortgage vs. variable-rate. If your renewal has already passed, consider looking into mortgage refinancing instead.

    1. Look for savings in your other bills.

    Like it or not, 66% doesn’t leave much room for other expenses. But if you can’t reduce the 66% any further, you may be able to cut back on the 34%.

    Look at all of your bills – not just the housing-related ones – with a fine-toothed comb. Do you need a subscription to HBO Go and Netflix? Are you paying for services you no longer use? Can you switch from brand-name groceries to generic? Are you paying pricy service fees for your bank account? Can you walk or bike in the summer instead of taking the TTC?

    While these potential savings may be relatively small, they can really add up. And if your goal is to own property in the next few years, they might be what makes the difference in down payment or shortens the homeownership timeline. It’s all about priorities.

    1. Focus on paying down debt.

    Debt is bad for your budget in two ways. First, having more debt means more payments each month. If you have $9,000 in credit card debt, for example, and are always making the minimum payment, you’re going to be paying it off for a very long time as interest adds up. And that money could be going to other things in your budget – like your mortgage or savings for a down payment.

    But the second reason that debt can hurt housing affordability has to do with lender regulations. Federally-regulated lenders in Canada (the big banks) have to assess your current debt levels when you go to them for a mortgage or refinancing. If you have too much housing-related debt (known as the Gross Debt Service ratio – or GDS) or too much total debt (known as the Total Debt Service ratio – or TDS) you’re going to have a much harder time getting a mortgage – if you can get one at all.

    Paying down your high-interest debt like credit card bills, a line of credit, student loans, etc. quickly is in your best interest, both to save more money and to improve your chances of getting a mortgage or a better rate on renewal.

    You might consider:

    • A debt consolidation loan, like the ones offered by DebtCare Canada.
    • If there is a lot of debt, filing for a consumer proposal or for bankruptcy.

    The housing affordability crisis in the GTA is making it difficult for renters, house hunters, and homeowners alike – but there are savings to be found.

    At DebtCare Canada, we offer financial help to people with all types of credit and income. Ask us today about our debt relief program or our loans and mortgages.

    Call 1-888-890-0888 or visit www.debtcare.ca.

  • Liberty Tax Filers – What to Do if You Will Have a Tax Debt You Can’t Pay?

    It’s income tax season and many Canadian filers may be turning to online tax preparation services, like Liberty Tax.

    These services are great options for submitting your income tax return, and for finding more deductions and rebates you may not have known about. But what happens if you’re assessed with a tax debt that you can’t afford to pay?

    Online tax preparation services like Liberty help you file your taxes – but they don’t help you avoid CRA collections.

    If you owe a tax debt that you can’t pay, either through filing with an online tax service or with an accountant, here are some best practices to keep in mind:

    1. File even if you can’t pay.

    If you know you will owe a tax debt, file anyway before the income tax deadline of April 30. Not filing will only makes things worse.

    If you don’t file, you can be assessed with failure to file penalties, and even be charged with tax evasion.

    It’s better to get your return in and look into options for how to clear the tax debt, instead of just letting it fester.

    2. Seek outside tax help.

    While online tax services like Liberty are good tools for filing your return, they are not debt consultants. Case in point: at our last check, Liberty Tax Canada didn’t appear to have a dedicated resource page about owing a tax debt.

    Even if you use a tax service to get filed, the best people to help with an outstanding tax debt are, of course, people who understand debt. Even if you work with an accountant to get your taxes filed, the accountant will not necessarily have access to tax debt resources.

    Instead, you want to seek advice from an experienced tax debt consultant, preferably one like DebtCare Canada with a specific program for dealing with the Canada Revenue Agency (CRA).

    3. Don’t negotiate with the CRA on your own.

    The CRA offers options to negotiate a payment plan and even has some debt forgiveness programs for outstanding interest and penalties. While these can help do not attempt to use them alone.

    This is because the CRA can take the information you provide through these programs and use it to start collection action. For example, if you fill out a financial disclosure form with your banking information, the CRA now knows where you bank and can decide to freeze your account if you miss a payment.

    It’s far better to work with a CRA negotiating specialist.

    4. Look for ways to pay the outstanding tax debt.

    Ideally, it’s better to not owe the CRA at all. So, if you know that you will owe a tax debt you can’t afford to pay, you would (generally) be better off financially taking out a loan or accessing home equity and paying the CRA with that money, and then owing the lender instead of the CRA.

    This is because CRA collection action is so much more aggressive than what the majority of creditors can enforce.

    Also, many lenders will arrange a fixed payment plan, so you can plan out repayment in a realistic timeframe with realistic terms. The CRA may not do the same.

    5. Consider debt consolidation options.

    What can you do if you can’t get a loan big enough to cover the tax debt? The answer here lies in debt consolidation.

    If you have too much debt to qualify for a loan, or a bad credit history, you might look into debt consolidation options, or filing for insolvency.

    Filing for a consumer proposal or for bankruptcy effectively takes care of your unsecured debts by declaring that you are unable to pay them.

    In a consumer proposal, you make a settlement proposal to your creditors – including the CRA. If accepted by the majority of your creditors, your unsecured debts are paid for with a lesser amount. You must be able to prove that your creditors will get more money this way than if you were to file for bankruptcy. In a consumer proposal, there is a debt limit of $250,000 (not including your mortgage).

    If you have more than $250,000 in debt, you might consider a different kind of proposal, or filing for bankruptcy. In a bankruptcy, your assets are often sold to make up the debt owed.

    While filing for insolvency is often not the first choice, it’s a better option than owing a tax debt to the CRA. If you owe a tax debt, the CRA can start collection action – which could include wage garnishments, freezing bank accounts, liens on assets, and in some cases even criminal charges.

    Also, if you wait to pay your tax debt, you will be charged even more because you’ll start to incur interest and penalties.

    If you file your taxes through an online service, like Liberty Tax, remember to:

    • File your taxes on time.
    • Reach out to a debt consultant if you can’t pay.

    At DebtCare Canada, we provide access to one of the only programs in Canada that can resolve a CRA tax problem. We can help you deal with your tax debt quickly.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Bank of Canada Interest Rate Stays at 1.75% for March 2019

    The Bank of Canada interest rate is staying at 1.75% for March 2019.

    On March 6, 2019, the Bank of Canada (BOC) announced they are maintaining the overnight interest rate for the time being.

    Their reasons were:

    • The slowdown to the global economy has been worse than the BOC predicted – including trade tensions and uncertainty.
    • In Canada, consumer spending is down despite employment growth. Essentially, people are spending less but earning more.
    • The housing market is also down.
    • Business exports and investments have fallen short of expectations.

    The next BOC announcement is scheduled for April 24. Between now and then, the BOC will be closely watching “developments in household spending, oil markets, and global trade policy.”

    What This Means for You

    At first glance this is good news – no interest rate increase means more time to deal with outstanding high-interest debt.

    But there is some information that could be concerning.

    1. Housing Affordability

    According to the BOC, Canadians are earning more but spending less. At the same time, the housing market is softening – so many homeowners may be locked out of the market or have their home equity drop.

    Housing affordability in Toronto, Vancouver, and other major cities has been making headlines recently. Having a bigger paycheque may not mean much if your expenses are still rising.

    What to do if you’re worried about your property value or accessing mortgage financing:

    Talk to a financial counsellor about your home equity position and what your options are. For instance, at DebtCare we offer first mortgages, second mortgages, home equity lines of credit, and more.

    2. Unstable Employment

    There have also been headlines about precarious employment – meaning more people have jobs, but those jobs are not necessarily stable income. They may be temporary contracts or have fluctuating hours. In these cases, it can be hard to plan for, and stick to, a budget.

    If you’re worried about stable income:

    Talk to a financial consultant about creating a flexible budget that works for you and about financing for slower periods.

    3. Household Debt

    The third factor that might be at play is many Canadians are using any extra income to pay off debt. Canadian household debt reached a new high in 2018 — over $2.16 Trillion. When you have high levels of debt, it can be hard to pay it all down. This often causes a vicious cycle of paying for the same bills over and over, especially if you are only making the minimum payment each month.

    If you’re worried about household debt:

    Talk to a financial consultant about your debt management options. Debt consolidation, home equity, or insolvency filing options – like filing for a consumer proposal or for bankruptcy – can help deal with problem debt in a sustainable way.

    Get your finances on track before the Bank of Canada announcement on April 24. DebtCare Canada can help.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • CRA Director Liability and You – Protect Yourself!

    CRA Director Liability and You – Protect Yourself!

    CRA Director Liability and You – Protect Yourself Before It’s Too Late!

    If you own, or are a director for, a company and accept trust money for the federal or provincial governments, you could be subject to CRA director’s liability.

    CRA Director Liability

    CRA director liability means that the Canada Revenue Agency (CRA) can decide that you owe a tax debt for your business – personally.

    Like anything, director’s liability is a process and there are ways that you can protect yourself if you’re assessed.

    Here’s what you need to know.

    What is CRA Director’s Liability?

    In Canada, incorporated businesses are considered separate legal entities from the owners’ personal assets and liabilities. If any debt is accrued by the incorporated business, the employees, officers, and directors are not held personally liable.

    However, this isn’t always the case – also known as director’s liability.

    If the CRA can’t collect an amount owing from the business directly, it may enforce director’s liability and assess the director, or directors, personally. This is most common with unremitted GST/HST trust money or unpaid payroll source deductions.

    What Happens if You Receive a Director’s Liability Assessment?

    If you are subject to director’s liability and can’t pay, the CRA might place liens on your assets, freeze your bank account, garnish wages, and more. And they can do this even if the corporation is no longer operating.

    If you are, or ever have been, the director of a corporation with a CRA tax problem, you need to act fast.

    How to Protect Yourself

    1. Do your due diligence.

    In the event that you are the subject of a director’s liability assessment, paperwork is your ally.

    If you can prove that you made your best efforts to have the corporation pay the GST/HST remittance or other deduction, then you may have a chance of having it overturned.

    According to Mondaq:

    “There is also a “due diligence” defence available to taxpayers who are assessed for CRA director liability by Revenue Canada. Subsections 227.1(3) of the Income Tax Act and 323(3) of the Excise Tax Act contain identical wording which states that a director is not liable for a corporation’s failure to collect GST/HST or Payroll Source Deductions if they “exercised the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would have exercised in comparable circumstances”.

    However, this solution will likely require a tax lawyer and could end up costing more – especially if the circumstances cannot be proven.

    2. Make note of your resignation date.

    If you’ve resigned from the corporation, or are planning to resign, make sure the date is well-documented. This is because, in many cases, there has been a precedent set of a two-year limitation period.

    According to Lerners, many of the statutes that impose liability on a director have a two-year limitation period. For example, a claim for unpaid wages against a director under the Employment Standards Act, a claim for which there is no due diligence defence, cannot be made more than two years after a director resigns.

    However, if a director resigns on paper but continues to act like a director, then the two-year time limit is void. In addition, the resignation needs to be clearly stated. Lerners recommends being on the public record with your resignation and its effective date.

    “When government officials are considering an assessment against a director, the first place they check is the public record,” Lerners notes. “You do not want to be in the position where you receive a letter proposing to assess you personally when you resigned years before, but your resignation was never properly noted on the public record.”

    Again, this solution would most likely require a tax lawyer.

    3. Find solutions for the tax debt.

    There may be an event where you are being assessed for director’s liability and cannot afford to work with a tax lawyer or don’t have a defense available.

    In these cases, a CRA director liability assessment can be dealt with in the same ways as personal tax assessments: by making a plan for the debt.

    The CRA wants their money and you may have to pay it – so the solution becomes finding a way to raise the funds. This might include:

    • Taking out a secured loan.
    • Accessing home equity.
    • Insolvency options, like filing for a consumer proposal or personal bankruptcy.

    If you owe a director’s liability and know that you can’t pay it all, even if you use home equity or a loan, insolvency filing options may be the answer. When you file for a consumer proposal or personal bankruptcy, your unsecured debts — including tax debt — are included.

    This is the only way, besides paying the debt in full, to stop CRA collection action, such as requirements to pay, frozen bank accounts, and liens against your assets.

    Whether you decide to pursue litigation or deal with the CRA director liability tax debt directly, DebtCare Canada can help. We’ll go through your options and find the best way to stay protected.

    Do you have a CRA director liability, call 1-888-890-0888 or visit www.debtcare.ca for a free consultation.

  • Happy Thanksgiving Weekend from DebtCare Canada!

    Happy Thanksgiving weekend from all of us at DebtCare!

    We are thankful this year for the opportunity to help Canadians with all types of credit and income.

    What are you grateful for in 2018?

    We hope you enjoy the weekend with family, friends, and a big dinner!

  • Happy Canada Day from DebtCare

    Happy 150th Birthday Canada!

    Enjoy the Canada Day celebrations with family and friends, check out some fireworks and fill up on some great food! All the best on this momentous national occasion!

  • 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.