Things that can affect your credit and what can be done to help improve it.
Imagine being excited to purchase your first new car. You go through the paperwork and provide all your income statements, only to have the dealership turn you down because of your credit rating. Nothing puts the brakes on an auto loan faster than a low credit score, and this isn’t the only issue it can cause.
Who is Looking at your Credit Ratings?
Mortgages, unsecured loans, business loans, and even credit card companies, all look at your credit rating before determining your eligibility. A low score can shut you down regardless of income history and stop you from getting access to the funds you need. Credit scores range between 300 and 900, with 650 being fairly average. The higher the credit score, the less risk you pose to lenders.
All it takes is one financial setback to derail your credit score and bringing it back up is harder than it sounds. Job loss, medical issues, and costly repairs can maximize your credit card spending limits and add tens of thousands in debt. Suddenly, you may end up with more bills than you can pay and recovering your credit score seems impossible.
Credit Counselling is an Excellent First Step
When you’re drowning in debt, it’s time to seek credit counselling services in Ottawa. A Llicensed Insolvency Trustee can help you develop a plan and communicate with creditors. This isn’t a problem that will go away if you ignore it. Facing a financial crisis is a lot less intimidating when you are working with an experienced professional who is looking out for your best interests.
A Consumer Proposal in Ottawa Can Prevent Additional Damage
There are times when your income isn’t enough to cover your monthly payments. If you don’t have any valuable material assets, then you may feel like bankruptcy is your only option. A licensed Ottawa insolvency trustee can draw up a consumer proposal to offset bankruptcy and help restore your credit. A consumer proposal is a legally binding agreement between you and your creditors. They will stop the collections process, and you must agree to pay back a portion of what’s owed over a specified amount of time. Making these payments consistently and on time can raise your credit score faster than discharging debt using bankruptcy. A consumer proposal will take three years to fall off your credit report. Compared to the 13 years a second bankruptcy takes to be erased, this is a much better option. Even an initial bankruptcy can stay on your report for nearly a decade and continue to stay visible to potential lenders. Repairing your credit score can take years of good financial habits and understanding this is paramount to success.
What Can You Do to Improve Your Credit Rating?
Improving your credit rating is a process and following the right steps is critical. It won’t happen overnight and will require dedication and financial education. Credit counselling with D. & A. MacLeod can start you on the path to financial health.
If you’re struggling with debt and it’s impacting your credit rating, contact us immediately. The sooner you address the problem, the sooner you can stop worrying and start working towards financial health and stability.