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  • 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.

  • Debt Relief in Canada Blog Series Part 4 – The Reality of Making a Debt Settlement

    You may have heard about debt relief in Canada being offered by debt reduction companies or some of the government reports warning consumers about the risks associated with debt reduction companies.

    The debt reduction companies that the government has been speaking out against are those who offer debt relief in Canada without a bankruptcy or consumer proposal. These debt reduction companies will offer you a program whereby you pay them on a monthly basis over a period of time with a promise at the end that they will settle your debts.

    The reality of making a debt settlement with your creditors is that generally a creditor will not make a debt settlement unless you have the funds to forward them the full settlement amount at the time the debt settlement is made. In almost all cases, your creditors and their collection agencies will not accept monthly payments when they approve a debt settlement, unless it is part of a consumer proposal. For example, if you owed $1,000 and the creditor agreed to accept $600 as a full and final debt settlement, they would want to be paid $600 at once, not paid in monthly instalments.

    Direct debt settlements are often made with creditors when an individual owes a small amount of debt (less than $8,000 in total).

    So, making a debt settlement with your creditors is a real possibility and is something to be considered, but only if you are in a position to pay the settlements in full if they are accepted. Where debt reduction companies are concerned however, and in almost all cases, money is collected from you monthly and a full and final settlement with your creditors is not made until all of the money has been collected to satisfy any settlements that the debt reduction companies were considering offering.

    In the absence of the ability to make a debt settlement, you can look at a consumer proposal, which is another viable option for achieving debt relief in Canada. The benefits to a consumer proposal are:

    You can usually reduce the amount of debt that you owe

    1. It is a legal process that can, in most cases, stop collection action
    2. It will result in a single monthly payment which is typically less than what you have to pay your creditors now
    3. Your money is administered by a trustee who is an official appointed by the superintendent in bankruptcy and not a private debt reduction company (who may or may not be in business when the time comes to make a debt settlement)
    4. You can re-build credit quickly because the consumer proposal is removed from your credit report 3 years from the date it is paid in full
    5. Because a consumer proposal is negotiated, once accepted the balance can be paid off at any time should your financial situation improve

    The best thing to do if you need options for debt relief in Canada is to work with a Canadian provider of financial or debt consultation services that is not a trustee or a debt reduction company who administers debt reduction plans. A debt consultant will be able to assist you in establishing a plan that will help you achieve your financial goals, will be able to align you with the right professionals to achieve them, and will represent you through the process.

    For more information about debt relief in Canada or if you would like to discuss making a debt settlement please contact DebtCare Canada at 416-907-2582 or visit www.debtcare.ca.

  • Debt Relief in Canada Blog Series Part 3 – Are There Consequences to Filing for Bankruptcy?

    There are many options for debt relief in Canada, and one of the most common is bankruptcy. If you have financial problems, bankruptcy may seem like a scary option because of the consequences that many people associate with filing for bankruptcy. Hopefully this article will help you to understand bankruptcy better and determine if in fact it could be an option for debt relief that you should consider.

    Bankruptcy is generally filed by people who have limited income or significant debt in relation to their income. Most first-time bankruptcies last either 9 or 21 months. When an individual files for bankruptcy, a trustee in bankruptcy will assess the bankrupt’s household income, assets, liabilities and personal circumstances. Personal circumstances include the number of people in the household and the number of dependents that the bankrupt has. Based on bankruptcy guidelines, if your income, once all factors are considered, is below a specified threshold, then the monthly payments in bankruptcy will last for 9 months. If the income is above a specified threshold, then it will be determined that the bankrupt has surplus income. This will result in higher payments in bankruptcy over a specified period of time, in most cases 21 months.

    Some of the pros of filing for bankruptcy are:

    • Immediate relief from collection action from unsecured creditors (such as wage garnishments).
    • A monthly payment that is less than what you are likely contractually obliged to pay to your creditors now.
    • The opportunity for a fresh start to get out of debt in a short period of time, enabling you to rebuild your credit and finances.

    Many people don’t know that, in many cases, when you file for bankruptcy you are able to keep your home and vehicle.

    Some of the cons of filing for bankruptcy include:

    • If your financial situation improves during your bankruptcy you could be subject to additional surplus income. If there was no surplus income when you filed for bankruptcy and your bankruptcy repayment is over 9 months, surplus income during bankruptcy could result in your monthly payment in bankruptcy being extended to 21 months.
    • The bankruptcy will remain on your credit report for 6 years from the date it is discharged. With that said, most financial institutions will do business with a bankrupt individual who has 2 years of re-established credit after bankruptcy.
    • Having a number of assets with equity in them will complicate things. In this case, a consumer proposal may be a better option than bankruptcy.

    Bankruptcy is a very viable debt relief option in Canada, and while there are some consequences of filing for bankruptcy, in many cases there are many more benefits. Bankruptcy is an option for debt relief in Canada that can provide you with immediate relief, not only from collection action, but also the stress that accompanies a financial problem. If you have creditors that are currently after you, perhaps even suing you, this is relief that can provide you with a breath of fresh air, enabling you to think clearly again and get your personal and financial situation back on track.

    For more information about options for debt relief in Canada or to see if you are a candidate for bankruptcy please call DebtCare at 416-903-4000 or visit www.debtcare.ca.

  • Credit Counselling Canada – How Does It Work and Who Qualifies

    If you are having challenges managing your debt there are many solutions available. The solution you choose will largely depend on your personal and financial circumstances. The amount of debt that you have, for example, will change the financial solutions available to you.

    Credit counselling Canada is a service that helps many Canadians deal with financial challenges. Credit counselling Canada, like any other financial solution, has its pros and its cons. While Credit counselling Canada can help Canadians with any amount of debt, you are best suited to consider it as an option if you owe $7,000 or less in total debt.

    Credit counselling Canada is largely funded by creditors and is not for profit. The credit counselling agency will make a proposal to your creditors that allows you to make a reduced, fixed monthly payment each month. This proposal is not a consumer proposal and this proposal will not reduce your overall debt. It simply provides for a reduced monthly payment.

    The main benefit here is that if you cannot manage your current monthly payments, this will enable you to do so. People who have payday loans and only payday loans are best suited to consider credit counselling Canada. Generally people who have multiple payday loans and no other debt only owe a small amount of money, so other financial options, such as a consumer proposal, are not available to them. Credit counselling Canada will enable someone who has expensive payday loans to make a single reduced monthly payment that they can afford.

    The cons of a credit counselling program include:

    • Damage to credit (likely damage to credit has already occurred though if you are not managing your monthly payments)
    • Overall amount of debt is not reduced
    • Depending on the repayment plan you negotiate, it could extend over many, many years

    The cons that exist with Credit counselling Canada are the primary reasons why an individual who owes more than $7000 should consider other financial options rather than jumping into a credit counselling program.

    A consumer proposal is often a better option than a credit counselling program. When a consumer proposal is arranged, it is formal and final. If your creditors accept a consumer proposal you have the option to pay it off in full at any time. While a consumer proposal can also have some negative impacts on your credit, your credit can often be repaired faster with a consumer proposal when compared to a credit counselling program. Evidence of a consumer proposal will be removed from your credit report three years from the date it is paid in full.

    A consumer proposal may reduce the overall amount of your debt, and because you can pay it off in full, the ball is in your court as far as how long it takes for you to pay it off in full.

    Generally speaking, if you have a financial problem that is resulting in an inability for you to make your monthly payments, or if you have too much debt, you should seek financial guidance. It is advisable to seek this guidance from an independent financial professional who you can hire to help you make the best financial decision and who does not work for the company that is providing you the services. For example, if you are considering a credit counselling program, do not go directly to the credit counselling agency because they will advise you based on the programs they have available, or if you are considering a consumer proposal, do not go directly to the trustee in bankruptcy or you may not get the best deal.

    For more information about credit counselling Canada or to see if you qualify please visit 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.

  • How to Rebuild Your Credit Blog Series – Part 3 Credit Balances That Are At, Close to, or Over

    This is the third part in a four part blog series about how to rebuild your credit. Learning how to rebuild your credit begins with learning how to manage it. One major impact to your credit score is when you have credit card products that are close to, at, or over their limits.

    Many people think that the best way to build credit is to get a credit card, use it, and then make monthly payments. This is a dangerous proposition. How you manage each credit card will impact your credit score either by either increasing or decreasing it.

    Learning how to rebuild your credit means understanding how your credit habits can result in a decrease to your credit score. As a rule of thumb you should try to ensure that your credit card balance does not exceed 75% of your limit. If it does, it will not only reduce your credit score but will also trigger a message on your credit report that says “proportion of balances to credit limits are too high”. Even if you have 10 credit cards and only one of them is close to, at, or over the limit, it will negatively impact your credit score and trigger the above mentioned message on your credit report.

    If you have had bad credit in the past and are trying to figure out how to rebuild your credit you may see a secured credit card as one option, and financial professionals will often suggest this as a way to rebuild credit. When you take out a secured credit card, you will send the credit card company a deposit and then they send you a credit card with a limit equal to or less than the deposit you sent them. When you do this, that credit card has the potential to rebuild your credit. Re-loadable credit cards are not secured credit cards and do not rebuild your credit.

    When trying to rebuild your credit, if you take out a secured credit card it is likely that your secured credit card will have a smaller limit, usually $200, $500 or $1000. We discussed the issue of how much of an impact it can have to your credit if you have a balance on even one credit card that is close to, at, or over your credit limit. This is one of the most common mistakes people make when they take out a secured credit card. Capital One is a company that offers secured credit cards and often a first time secured credit card with Capital One will have a low starting limit of a couple hundred dollars. Even if the limit on your secured credit card is only $200, do not carry more than 75% of your limit as a balance. For example, if your secured credit card has a limit of $200, do not run a balance higher than $150.

    In other situations, when people begin nearing or going over their credit limits on credit cards, it is a sign of a deeper financial problem. It is very easy to get in over your head with credit cards. You may have a few credit cards and one month you may use one to make an expensive car repair, and then another month you may use another when you go on vacation, and then another month you may use another one to make repairs in your home. Before you know it you can have several credit cards with high balances and when interest begins to accrue they can become very difficult to pay off. Minimum payments barely cover interest and if you get caught in a cycle of only being able to afford the minimum payments it can take many, many, years to pay them off.

    If you want to know how to rebuild your credit and you have credit card debt and are only making minimum payments right now, it may be time to make some choices that will enable you to rebuild your credit. Sometimes it’s hard to know which choices are the right ones when it comes to dealing with your debt. There are many resources available to people who struggle with debt. Once you have dealt with your debt and are beginning the process of rebuilding credit, your best option when using a new credit card that is meant to rebuild credit is to use the card for limited expenses, such as gas, and only use as much as you can afford to pay off in full in a given month.

    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.

  • How to Rebuild Your Credit Blog Series – Part 2 Late Payments and Defaults to Creditors

    This is the second part in a four part blog series about how to rebuild your credit. If you have made late payments on your credit card or have defaulted on debts to creditors this will have a severe impact on your credit that will not resolve itself until you deal with the debt you owe. Many people think that late payments and defaults on debt obligations simply disappear after 7 years, but this is not the case.

    If you want to know how to rebuild your credit you will need to understand “tradelines” and how long items remain on your credit report. There are two different areas where credit is rated on your credit report. Your credit score, also known as your beacon score or fico score, is a number between 300 and 900 which scores your entire credit situation. 300 is the worst credit score and 900 is the best. Most banks like to see that individuals have a credit score of 680 or higher.

    The second area on your credit where you are rated is on “tradelines”. Each loan or credit card provider will report on their own tradeline how you have paid them. The tradeline will show the name of the creditor, the starting balance of the credit product, your repayment terms, your current balance, the number of times you have been 30, 60 or 90 days in arrears and an overall rating. If it is a credit card, there will be an R or an I with a number beside it. R is used for credit card and line of credit products and stands for revolving because credit cards allow you to constantly borrow against them. I is used for loans and stands for instalment because loans are repaid in equal monthly instalments.

    You may have heard people say that they have an R1 or an R9 on their credit report. The number beside the letter represents the current standing of the account. 1 means up to date, 2 means 30-60 days in arrears, 3 means 60-90 days in arrears, 4 means 90-120 days in arrears, 5 means 120 days to 150 days in arrears, 7 means you are in credit counselling, 8 means that you have had security repossessed and 9 means that the account is a bad debt (6 months or more behind). When you have an account showing a number from 2-5 beside the letter, if you pay the account up to date the rating on that tradeline will be restored to a 1, however the record of the late payment will still show. If your rating falls to a 9 it will remain a 9 until 6 years from the date that the creditor reports that the debt was settled or paid in full.

    If you want to know how to rebuild your credit, a fast trick will be identifying how bad your credit actually is. If you have a lot of debt, habitual late payments, or 9’s on credit items, then looking for ways to consolidate or settle your debts is your fastest road back to having good credit.

    Simply leaving defaulted-on items on your credit will not mean that they will magically go away by themselves. They will remain there for 6 years from the last date that the creditor reported to the credit reporting agency that you owed the money.

    There are fast avenues that you can take to rebuild your credit depending on the severity of the damage to your credit and the amount of debt you owe. For example, if you leverage a consumer proposal to settle your debt, a consumer proposal is removed from your credit report 3 years from the date it is paid in full, which can in many cases result in the removal of a 9 rating faster than if you paid the debt in full. In addition, when 9 ratings are present (and where funds are available) you can often make a direct settlement with your creditor for much less than you owe which makes good sense considering that once a 9 rating is present whether you settle the debt or pay it in full the 9 rating will remain on your credit for the same amount of time.

    Figuring out how to rebuild you credit will begin with requesting your credit report so that you can know what is on it. From there you can work with a financial professional who can come up with the fastest solution to deal with your debt and rebuild your credit.

    For more information about how to rebuild your credit or if you are in debt and need help, please contact DebtCare Canada at 416-907-2582 or visit www.debtcare.ca.

  • How to Rebuild Your Credit Blog Series – Part 1 Too Many Applications for Credit

    This is the first part of a four part blog series about how to rebuild your credit. Many people don’t realize how important credit is until it is damaged. Once credit is damaged, it takes a long time to rebuild, and if you want to know how to rebuild your credit the first thing you will need to know is what is in your credit report. If you want to rebuild your credit, the first thing that we recommend is to request your credit report from Trans Union and Equifax. Trans Union and Equifax are the credit reporting agencies that your creditors report your credit habits to.

    The next thing you will have to do if you want to know how to rebuild your credit is to know the top four things that will reduce your credit score. These include late payments and/or defaulting on a credit card payment, too many applications for credit, having credit card balances that are close to, at, or exceeding the credit limit, and having too much credit or debt.

    The number of applications for credit speaks to the number of times in a given calendar year that you have applied for credit. Generally speaking, it is ok to apply for credit 4 times per year. Many people don’t realize that when you open a bank account, apply for insurance, etc., the company may pull your credit report. Companies are supposed to have you sign a consent form when you apply for services, and you are required to give them permission to pull your credit. With that said, sometimes people apply for services online or over the phone and it is not made clear by the company that they will have to request a credit report in order to provide services. Other examples of situations where someone might want to pull your credit include when you are applying to rent an apartment or when you are applying for a job.

    Another instance where your credit may be requested is when you apply for a credit product (such as a credit card) and you sign the terms and conditions document. Included in the document may be a provision that the company is allowed to pull your credit in the future to qualify you for future credit products, or in the event that you default on your payments. We have seen instances where a creditor has pulled a consumer’s credit report many times per year just to see if they qualify for a credit limit increase or other credit products. If you request your credit report and notice that a company that you have a credit product with has requested your credit report many additional times, you may want to consider sending them a letter telling them that they no longer have your permission to access your credit report without fresh written consent.

    If you have defaulted on a debt to a creditor, this can result in multiple inquiries being made about your credit by both your creditor and the collection agencies that they have hired to collect the debt from you. This is then used as a source of information to find out how to reach you, who you owe money to, where you work, and more. They will continue to pull your credit until you have made satisfactory arrangements with them.

    If you have requested your credit report and see more than 4 inquiries within the last calendar year, this will reduce your credit score and you should stop applying for credit for at least 12 months from the date of the most recent inquiry. If the inquiries relate to defaulted debts, we recommend working with a financial professional to address the debt on your credit because until you do so, not only will the inquiries from your creditor and collection agencies continue to harm your credit, but you may also end up with derogatory ratings and even collection items.

    If you would like more information about how to rebuild your credit or if you have a financial problem that you need help resolving, please call DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • How to Make a Credit Card Debt Settlement

    When credit card debt begins to build up it can become very difficult to pay off. Credit cards bear monthly compound interest so if you get into a routine of making minimum monthly payments, the interest can sometimes be as much as the payment that you make. The end result is that you make a minimum payment and then once the interest is applied to the balance, you end up owing the same amount as you did before the payment.

    If you start missing payments the balance increases and late fees may also be added to the balance, making the debt grow even larger. This can start a vicious cycle that can result in the credit card debt going to collections and destruction of your credit.

    There is no magic bullet for dealing with credit card debt. Your options are really to come up with the money to pay it off, borrow the money to pay it off, make a credit card debt settlement, or file a consumer proposal or bankruptcy.

    Before choosing an option to deal with your credit card debt you must look at many factors as you want to make sure that you select the option that will help you to achieve your long term financial goals. Why are you having a problem paying the credit card debt in the first place? Often times people stop being able to manage their credit card debt because of a lack of cash flow. If you are at the point where you cannot manage your credit card debt payments because of a lack of income then you may want to look at ways to reduce the credit card debt before you start trying to come up with a way to pay it off.

    The state of your credit report is also an important consideration when trying to come up with a plan to pay off credit card debt. If you fully defaulted on the debt (have not made a payment in 6 months) or have made habitual late payments, your credit report is likely to be in bad shape. Once your credit report is compromised, (whether you pay off the credit card debt in full or make a credit card debt settlement) there will be no difference in how long it takes to rebuild your credit. There will however be a major difference in how much it costs you to pay off the credit card debt.

    A credit card debt settlement can be achieved through a financial consultant who can make a credit card debt settlement directly with your creditor or through obtaining the assistance of a trustee to make the credit card debt settlement through a consumer proposal. The credit card debt settlement option will depend on many factors including your income, employment, financial goals, the amount of debt you have, the liquid cash available, and the number of creditors you have. If you want to make a credit card debt settlement, work with a financial consultant. He or she will be able to interpret your entire financial situation and come up with the best plan for you.

    For more information about how to make a credit card debt settlement please contact Michael Goldenberg by calling DebtCare Canada at 416-907-2582 or visit www.debtcare.ca.

  • Dealing with Debt Part 1 – Collections Debt in Canada

    Many people have collections debt in Canada. Collection agencies are routinely hired by private businesses to collect money from individuals who have defaulted. When a company assigns an account to a collection agency, the collection agency will add their fees and additional interest to the debt which will cause the debt to grow at a rapid pace.

    Some collection agencies will use tactics, like calling you several times daily at home and work to collect money from you, while others may have been authorized by your creditor to take Small Claims Court action against you. Collection agencies can also file a “collection item” on your credit report which will do considerable harm to your credit; however if you have defaulted on a loan or credit card, the damage to your credit may have already been done. Any way you look at it, dealing with collections debt in Canada is no fun.

    Conventional debts like loans and credit card balances are not the only types of debt that get assigned to collection agencies. If you default on a debt to a utility provider, default on a phone bill, gym membership, toll bill, traffic fines all of these are examples of debt that may be assigned to collection agencies to be collected.

    The good news is collection agencies in Canada are regulated in most Provinces. This means you have rights! In Ontario for example, the Ministry of Consumer Services regulates collection agencies through the administration of the “Collection Agencies Act”. You can view the Ontario Collection Agencies Act on the E-Laws website. If a collections debt in Canada has occurred and a collection agency is getting out of hand, you can complain to the Provincial Ministry that regulates it. Some Provinces will receive online complaints (as is the case in Ontario) while others will require that you mail them a letter and include evidence to support your complaint.

    If you have a collections debt in Canada it is likely because you are dealing poorly with debt. Rather than facing collection action, it is better to come up with a solution to deal with your debt and there are solutions available. There are a number of programs available that help people to deal with their debt and stop collection action. Dealing with debt can cause stress and strain to relationships and many people think that the only way to get out of debt is through personal bankruptcy. This is not the case. There are other solutions to dealing with debt that involve freezing the interest accumulating on your debt and also reducing the principal amount of debt that you owe.

    When you are dealing with debt the worst thing to do is ignore it. This will only prolong the length of time that your credit is damaged and the debt will not go away but will only continue to grow over time. The faster you deal with your debt, the faster you can work towards rebuilding your credit and finances and put the period in your life where your debt got out of control behind you.

    For more information about dealing with debt and collections debt in Canada please visit www.debtcare.ca or call 416-907-2582.