Living with bad credit in Toronto is not fun. It can impact every aspect of your life and finding ways to fix your bad credit is an important part of your financial well-being.
People with bad credit may find it harder to:
- get loans
- find a place to rent
- get credit cards
- get mortgages and
- in some cases – find employment.
If they are able to get loans, or credit – they may end up paying higher than standard interest rates.
What is Bad Credit?
Bad credit refers to a poor credit rating or poor credit history.
On our Credit Rating and Credit History information page we discuss what a credit rating is, how it is determined and some of the things you can do to build a good credit history.
Basically, a credit rating is an evaluation of your credit history by your creditors, who pool your credit information.
The two main companies in Canada that gather credit information are Equifax and Trans Union. As well as creditors, Equifax and Trans Union receive information from collection agencies, banks and the Government (re the status of Bankruptcies and Proposals).
In addition to the amounts you have borrowed or have available to you, creditors report on:
- when you miss or are late with payments,
- when your debts have gone to collection, and
- when you have been denied credit.
Your bank will also report on any NSF cheques you have issued.
Can Bad Credit in Toronto be Fixed?
Yes – but it takes time and effort. Even the worst credit rating can be turned around – in time. However, it means making and keeping a commitment to using credit wisely.
Start by getting a copy of your credit history from Equifax and Trans Union. Check it thoroughly and report any errors you find.
Then commit to:
- Making all your payments in full and on time – every time.
- Getting and keeping your spending under control.
- Paying down your debts as soon as possible – make getting out of debt a priority.
- Avoiding over use of credit – develop a cash-is-better attitude.
- Checking your credit history every year to make sure there are no errors.
Will a Bankruptcy or Consumer Proposal Ruin a Credit Rating?
Usually, by the time a person files for bankruptcy or a consumer proposal, their credit rating is already very poor.
The good news is, once a first-time bankruptcy is successfully completed, it will only remain on a credit history for six to seven years. Once a consumer proposal is successfully completed, it will only remain for three years.
If you are considering bankruptcy or a consumer proposal, you need to speak with a Licensed Insolvency Trustee. We will examine your financial situation and discuss all of your options with you.
