How to pay off your debts via payday loan consolidation company

Image result for fix bad creditAs you go through life and become familiar with the different credit products available, you will realize how good credit can be for your financial health. A good credit rating is one of the best stepping stones you can create. This can help you secure a healthy financial future and get affordable rates on car loans, mortgages, or any other type of loan. So, it’s important to stay up to date with all your credit-related transactions and make your payments whenever necessary. Once you have been able to maintain this strong record of credit use, the possibilities are almost endless.

However, life sometimes turns us down and situations beyond our control arise. Physical, mental and financial emergencies can worry us for months or even years. At that point, some people have trouble controlling their expenses. This results in bad credit after a long period of debt problems. Consumer proposals and bankruptcies, no matter how hard, occur every day across the country. For all these reasons, repairing and maintaining credit after it has been badly damaged can be one of the most frustrating and compelling financial difficulties. So, how to deal with it? How do you start repairing bad credit when it’s time to take care of it?

What are the causes of bad credit?

A bad credit score can be attributed to a number of different factors in the financial world. One of the main causes is the accumulation of consumer debt due to unpaid credit card bills and various types of personal loans, anything that is consumable and has no long-term value. Loan default is another major factor in the loss of credit that many Canadians face on a regular basis. Whatever the cause of your debt problems, most information goes directly to your credit report, where they can stay for years. At every bad transaction you make, your credit rating will also drop.

Irresponsible use of a credit card

One of the main causes of indebtedness in Canada is, of course, the use of the credit card. Credit cards are often the first credit product that people ask for and start using regularly. In fact, the responsible use of a credit card (ie paying bills on time and in full) is a good way to build and maintain a good credit history. However, using a credit card is easy and convenient, which is not always a good thing. In most outlets, you do not even need to enter your PIN (Personal Identification Number) because most machines have the tap option. And since technically you only have to pay a minimum of monthly fees on your credit card bill to avoid a penalty, they are very tempting.

Unfortunately, this same level of convenience is exactly why so many people end up with a serious consumer debt. Conversely, low credit card usage can also lead to low credit ratings, which could also lead to rejection by lenders. If you can not manage a credit card, how are you supposed to handle the debt that comes with a loan?

Again, the responsible use of a credit card (late payments, incomplete payments, or not paying at all) can quickly damage your credit rating. Constantly keeping a high balance or using your cards to the fullest can also have the same effect. If you do not pay your bills for months, you could be put in “credit card account cancellation”. This happens after a borrower does not pay his bills for a period of more than 6 months. In fact, being on a credit card account is one of the worst things that can happen to your credit rating. When you are delisted, your credit card company will mark your account as “suffering” and will require a refund of every penny you owe. If you continue to avoid them, your account will go to the collections. Once the process is started, things can quickly turn to the legal system. Then, not only could you be subject to a payroll seizure, but this notice of suffering will damage your credit rating and will appear in your credit report for 3-7 years.

Loan default on loans

Being in default of payments on your loans is as bad as not paying your credit card bills. Worse still in some respects, because the “secured” loans involve a guarantee, and could be taken back to compensate the lender in the event of default by the borrower. Missed car and mortgage payments are huge death sentences for many Canadians.

Consumer proposals

In order to file a consumer proposal, you will have to deal with a licensed insolvency trustee. He will negotiate with your creditors on your behalf, informing them that you are unable to repay them as a single payment. Once the proposal is accepted, you will repay your debts as regular payments through your trustee. Although a consumer proposal is above bankruptcy, it will hurt your credit rating for at least 3 years. In fact, if your debt level is so bad that it takes 4 years to settle, it will appear in your credit report for 7 years.


The worst thing that can happen to your credit rating is probably to declare bankruptcy. Despite the fact that this may be the only choice for many consumers with serious debt problems, be aware that this will have a considerable impact on your credit rating for a very long time. In fact, a first personal bankruptcy will remain in your credit file for 6 to 7 years, depending on the bankruptcy agency you are dealing with as well as the province or territory where you live. It takes 7 years in Quebec, New Brunswick, Newfoundland and Labrador, Prince Edward Island and Ontario. And if it’s your second bankruptcy? 14 years to damage your credit. For this reason alone, a bankruptcy should always be considered as a last resort in the most serious debt cases. Thus, before concluding, it is extremely important, as with the consumer proposal, to obtain a free consultation with a licensed insolvency trustee to determine that a bankruptcy is the only option. Remember that after the first free consultation with the trustee, you will have to start paying for the trustee’s services and all the adjacent legal fees.

How to improve your bad credit

All this does not mean that you will have bad credit all your life. If it’s worse than average, do not panic. It is possible to improve it. The key is to be patient and proactive. If your credit is badly damaged (ie, less than 500), it will take time and effort to fix it. Even if your credit is currently better than average, it is never wrong to find ways to improve it. Here are some things you can do to get there.

Always pay your bills on time and take care of your other debts

This should be put into practice by all credit card users and especially important for those whose credit is already damaged by a consumer proposal or bankruptcy. Keep an eye on all your bills, regardless of their content. Most utility bills do not appear on your credit report; however, a series of unpaid invoices could lead companies to transfer your accounts to collection agencies. Credit card bills, both paid and unpaid, will certainly be in your file. Even some communications companies will inform credit bureaus of unpaid bills. For credit card statements that you can not pay in full, you can make the minimum monthly payment, but do not do it too long. It is always better to pay off the full balance.

While it is important to save money for the future, it is also important to take care of your important debts, such as those related to your mortgage, car loan or any of your debts. other goods. Keep in mind that the more you ignore your debts, the worse the situation will be. Not only will your credit be damaged if your situation goes to court, but your secured assets could also be seized. If you can not repay your debts, contact your lenders immediately. Any legal lender would prefer to negotiate a longer payment schedule and be reimbursed than having to go through consumer proposals and bankruptcies. Depending on the status of your lender, consumer proposal or bankruptcy, it is possible that the money will not even be refunded, as companies like banks will be the first to be reimbursed. In fact, the whole legal process will take a lot of time and money, so they will do their best to avoid it.

Do not make too many requests for credit products

It is better to have a strong credit history than not having one at all, but it is not wise to make too many requests for credit. When someone examines your solvency record, the applications are listed there. Secondary requests occur when someone performs a background check or when you plan to do something unrelated to the credit. This can be for a job or for rental reasons. The same type of investigation occurs when you ask for a copy of your credit report yourself. Requests for confidential information do not affect your credit report.

However, primary claims, which occur when a lender or other financial institution reviews your credit report, affect your credit rating. When a particular request is made, a notice will appear in your credit report for 3 to 6 years and your credit rating will decrease by about 7 points in some cases. That’s why it’s important not to ask too much credit at a time. Not only will your credit rating decrease with each request, but it could also be a warning sign for potential lenders. This may indicate that you have debt problems and that you are constantly being rejected for new credit.

Consider getting a credit card with a guarantee

If your credit is low and you are not eligible for a regular, unsecured credit card, you can apply for a collateralized credit card instead. In fact, secured credit cards are often offered to borrowers who have bad credit. Unlike a normal credit card, a collateralized credit card requires a deposit, usually equal to the desired credit limit, in case the borrower can not make payments. The more the borrower uses the card without missing payments, the better his credit rating will be. After a few years of responsible use, he will be able to apply for an unsecured credit card and the initial deposit will be given.

Create a budget and start saving

Learning how to budget and save is an important part of your financial health, whether your credit is good or bad. However, this becomes especially important when you are trying to rebuild your budget. Creating a budget and reducing costs should be the priority. Think of unnecessary things and expenses that you could eliminate from your life. Each sub you do not spend can be put into a savings account, which you can use to pay off your debts. If you are already paying off your debts, you may not have much money left to save. However, you can open a separate savings account for unforeseen expenses, depositing an amount as soon as possible. It would be better than nothing.

Beware of companies that want to improve your bad credit

When your credit rating is badly damaged and your credit applications are refused because of this, companies will want to get your attention by promising to clean up your file. But be careful! This is probably a scam for people who are desperate to regain financial stability. Credit bureaus in Canada (Equifax and TransUnion) will not remove any information, negative or positive, from your credit file before they are legally authorized to do so. Plus, no amount of money or negotiation will change that. The only way to change information about your credit report is to report it as inaccurate and file a complaint with your credit bureau. If he determines that this inaccuracy is true, it should be changed immediately. When it comes to improving your credit rating, only you can work to do it.

Do not abandon

If your bad credit worries you, the only thing you can do is take a deep breath, relax, and start improving it. As already mentioned, depending on the severity of your credit, it will certainly not be easy to improve it. However, using your hard earned money to pay off your debts will probably be better than being sent to collection agencies or having to go bankrupt. If you went through a consumer proposal or a bankruptcy, your credit rating will probably be quite low, but not irreparable. If you are determined enough to resolve your situation, all you have to do is be patient and responsible with the money you have left. Pay off your debts via payday loan consolidation companies first, then you will have fun. We know that this is not very motivating, but it is important to respect it if you want to have a stable financial future.