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Tag: get rid of your debt

  • Personal Financial Improvement: How to Rebuild Credit in 3 Simple Steps

    How To Rebuild CreditGetting into debt is often very easy, and when that debt gets out of control it can be much harder to get out. The consequences of debt, especially when those debt responsibilities are not being met, can be devastating. Getting financing for a car, obtaining mortgage financing, or even being approved for a small loan for incidentals can be extremely difficult, and so getting out of debt is critical if you want to have a secure financial future. And, not only do you need to know how to get out of debt, you will then need to know how to rebuild credit.

    How can debt impact your credit? Missed or late payments, too much credit, too many credit checks and credit going to collections all work towards bringing your credit score down. Your credit report also reflects any credit activity and so any lending institutions can easily gauge credit behaviour based on this reporting. Many debt solutions, such as consumer proposals or bankruptcies can also harm your credit, but if it has gotten to the point that these debt solutions are where you turn for help, they can actually be the first step in how to rebuild credit.

    How to rebuild credit: Step 1. Recognize that you may have a financial problem. If you are at the point where you are living paycheque to paycheque and have accumulated so much debt that you are only making minimum monthly payments – even if you make those payments on time – you have a financial problem. Making minimum payments on credit cards barely covers interest and so the debt will never be paid off. If you can’t manage minimum monthly payments, you have a financial problem. If you rely on your credit or payday loans to make ends meet – even if you are honouring your repayment terms – you have a financial problem.

    How to rebuild credit: Step 2. As noted, the best way to start rebuilding your credit is to get rid of your debt. A professional debt management company is the smartest way to do this as they will be able to offer you the guidance and help that you need to get those debts paid off. Debt consolidation, a consumer proposal, bankruptcy or a debt settlement might be the answer – it all depends on your current financial situation.

    How to rebuild credit: Step 3. Once you have paid off/settled all of your debts, you need to attempt to establish your credit once more in order to repair it. A great way to do this is with a secured credit card. With a secured credit card, you offer a cash collateral and the lending institution will take that money and it becomes your credit limit. You then use the credit card as you would any other – and make sure to make regular payments, never just the minimum. Also, stay away from payday/cash advance loans. These do not report to your credit report and can start a vicious borrowing cycle that can be hard to get out of.

    Rome wasn’t built in a day, and rebuilding your credit won’t be either. It takes time, but knowing where to start is the first step.

    For more information about how to rebuild credit, or to find out about possible debt solutions, please contact DebtCare Canada today by calling 1-800-890-0888.

  • 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.

  • Stopping Collection Action before the Holidays

    The holidays should be a time for joy and family, not a time to be stressed out about your finances and trying to deal with bill collectors. Bill collectors are employees of collection agencies, and it doesn’t matter to them what time of the year it is. If a bill collector has been hired to collect a debt he or she will proceed with collection action.

    When bill collectors begin collection action you may feel powerless to stop it. Stopping collection action is difficult, and before you can do it you have to educate yourself about what types of collection action are legal. You also need to have a plan to deal with the debt. This way, when you begin taking steps towards stopping collection action, you have something to propose to your creditors to satisfy them so that you can enjoy your holiday without worrying about your debt.

    Generally speaking, the number one tactic that collection agencies deploy is communication. They will communicate with you by phone and by mail. The agency may call you several times per/day, in the evenings and on the weekends. For those of you who live or work with others who don’t know about your debt, this can be very embarrassing.

    Some collection agencies have paralegals on staff and have the ability to sue you. In this case, stopping collection action can become even more difficult because the court is involved. With that being said, it is possible to stop collection action being taken against you, even if the collection agency has sued you on behalf of your creditor.

    Certain communication from collection agencies is acceptable, while other forms of communication are not. Excessive phone calls, leaving personal information on voicemail or threats are all tactics collection agencies are not allowed to use when collecting a debt. Collection agencies in Ontario are regulated by the Ministry of Consumer Services. On the Ministry of Consumer Services website you can learn about your rights and even lodge a complaint if you believe that a collection agency has violated them.

    Now, if you have debt that has gone to collections you cannot ignore it. While you may be able to stop some collection actions, the debt will not simply go away. Owing that money is not the only thing to think about, as collection action can have long-term implications on you and your family. You need to have good credit these days because everyone checks credit. Having bad credit and debt can impact your ability to get a job, buy a home and even open a utility account or bank account.

    There are programs available which are effective at stopping collection action, even if the collection has a judgement against you or plans to or is garnishing your wages. These programs can also help you get rid of your debt and rebuild your credit. This is why it is so important not to ignore your debt over the holidays and look for ways to deal with it once and for all.

    By working with a good financial consultant, you can have your credit and finances reviewed to see what options are available to you and you may find that you can start the New Year collection free.

    For more information about stopping collection action and how to deal with your debt please contact DebtCare by visiting www.debtcare.ca or call 416-907-2582.

  • How to Rebuild Your Credit Blog Series – Part 4 Having Too Many Credit Products and Too Much Debt

    This is the fourth blog in a 4 part blog series about how to rebuild your credit. When you accumulate too much debt or have too many credit products, this can harm your credit. Credit card companies are aggressive, using marketing points programs, promotion and incentives to entice consumers to take out a credit card. Over time, it is not difficult to find yourself with several different credit cards with balances that are accumulating interest.

    If you want to know how to rebuild credit and you have several credit cards, your first step will be to close some of them. Some financial advisors will tell you that closing credit cards will actually harm your credit, when in fact in the long run getting rid of credit cards will increase your credit score. Having one or two credit cards is sufficient to have good credit so if you have more than that, closing some of them is a good idea. How you go about closing credit cards is the key.

    Firstly, closing all of your credit cards is not a great idea unless it is part of an overall plan to settle out your debt, and then taking out a single card to rebuild your credit. Simply closing down all of your credit cards without a plan to have a credit item to rebuild credit will reduce your credit score. If you have accumulated a lot of credit card debt and are working with a company to get rid of your debt with a plan to rebuild, then naturally it will involve wiping the slate clean (clearing and closing all credit card debt) and then starting fresh. In the absence of a financial plan to rebuild, closing all of your credit cards may reduce your credit score because you will not have credit reporting to your credit report. This is necessary to build your credit score because it shows new potential creditors, mortgage providers for example, how you pay your monthly obligations.

    Also, do not close out credit cards that have balances. If there are balances on credit cards you should first deal with the balances either by paying them off, settling them, or including them in a financial program to get out of debt. Once the balances are cleared, you can go ahead and close out the card. If you close cards when you have balances the result will be a credit card that has a balance and a zero credit limit and this will have the same negative impact on your credit report as if you have a credit card that is maxed out (see part three “Credit Balances That Are At, Close to or Over” in our four part blog series How to Rebuild your Credit).

    Additionally, if you plan to close out your credit cards make sure you write to the credit card provider clearly indicating that it is you who wants to close out the credit card balance. When a creditor closes your credit card they can report one of two things to the credit bureau: “credit limit closed by consumer” or “credit limit closed by credit grantor” – you do not want the latter reported on your credit report. Sending a letter will enable you to prove to Equifax that you in fact closed the card in the event that the credit does not report who closed the card accurately.

    This may all seem like good advice, but if you are drowning in credit card debt, closing credit cards right now is not really an option without a financial plan. Learning how to rebuild your credit takes time, as does dealing with accumulated credit card debt. There are fast and effective methods to deal with debt and start rebuilding your credit, but in most cases they will involve the assistance of a financial professional who can guide you out of your debt with a plan.

    If you would like more information about how to rebuild your credit or if you are in debt and need some guidance, please call DebtCare at 416-907-2582 or visit www.debtcare.ca.