credit problems Archives - Ira SmithTrustee & Receiver Inc.

We’ve been making you aware of the dangers of payday loan companies in our previous blogs – Legitimate Companies Don’t Guarantee Loans If You Have Bad Credit Or No Credit and Payday Loans Are Not The Answer To Your Financial Problems. Payday loan companies will go to any lengths to take your money and now their latest tactic is to target you with mobile apps and easy online access. Technology is making it easier for these unscrupulous operators to take advantage of you. And, if you have been taken advantage of by a payday loan company you are not alone. According to Statistics Canada:

Almost 3% of Canadian families said in 2005 they had obtained a payday loan in the preceding three years.
On average, Canadians borrow about $300 for a two week term.
There are about 1,350 payday loan storefronts in Canada.
The industry is worth an estimated $2 billion a year.
Payday loan borrowers tend to be young families.
Payday loan borrowers typically have poor credit or a previous bankruptcy.

Unfortunately, there are no updated figures from Statistics Canada. However, the Canadian Payday Loan Association in its study titled Payday Loan Users Study Ontario dated April 2013, reported that in 2012, significantly more respondents (65%) would choose payday loan companies over other options if they needed $300 when compared to 2007 (55%). This shows two things: 1. as we previously blogged, many Canadians are living paycheque to paycheque; and 2. this high cost borrowing source is gaining more acceptance and usage among those with credit problems.

Payday loan companies offer you instant cash even if you have bad credit or no credit, with instant approval. With a mobile app you don’t even have to go into a payday loan storefront. You can borrow money from your phone or computer by obtaining online bad credit loans. BUT, these companies aren’t getting you out of debt; they are creating more debt. Although the rules do vary from province to province regarding borrowing, you should expect to pay 25% interest when you borrow from a payday loan company, even if you repay the loan in a few days.

There is no quick fix for serious debt problems and digging a deeper hole for yourself with a high interest payday loan is only going to make matters worse. Stop the downward debt spiral and seek out a professional trustee. At Ira Smith Trustee & Receiver Inc. helping clients deal with serious debt issues is our business. There are a variety of options available to you including bankruptcy alternatives – credit counselling, debt consolidation, and consumer proposals – and bankruptcy. Let us help you end the downward debt spiral so that Starting Over, Starting Now you can live a debt free life.

Last week we discussed how Your Credit Score Can Be Ruined Even If You Don’t Do Anything Wrong. This week we’ll be addressing The 10 Most Common Credit Score Mistakes.

What is a Credit Score? According to the Office of Consumer Affairs (OCA) “Your credit score is a judgment about your financial health, at a specific time. It indicates the risk you represent for lenders, compared with other consumers. Unfortunately, there is not an online Canadian credit score calculator tool.

There are many ways to work out credit scores. The credit reporting agencies Equifax and TransUnion use a scale from 300 to 900. High scores on this scale are good. The higher your score, the lower the risk for the lender. Lenders may also have their own ways of arriving at credit scores. In addition, lenders must decide on the lowest score you can have and still borrow money from them. They can also use your score to set the interest rate you will pay”.

What are the 10 Most Common Credit Score Mistakes?

1. Failing to check your credit report for errors: As we discussed in last week’s blog Your Credit Score Can Be Ruined Even If You Don’t Do Anything Wrong. Check your credit report at least annually. Mistakes on credit reports are more common than you may have imagined and you need to stay on top of the situation. If you do discover any errors, contact the credit bureau as soon as possible to correct the situation.

2. Not using your full legal name in financial documents: It’s possible that people with common names or similar sounding names could have their name attributed to a credit report that is not theirs, as was the case for Mr. Dave Johnson of Pembroke, Ontario. Use your full legal name on bank accounts, credit applications and other documents that become part of your credit history.

3. Paying your bills late and failing to make at least the minimum monthly payment: If you don’t pay at least the minimum amount due on time your creditors will eventually report your account as past due, which can damage your credit score. If there is a reason why you won’t be able to pay your bill on time, contact your creditor before your bill is due to work out an arrangement if possible.

4. Maxing out on your credit cards: If your credit cards are maxed out, potential creditors may question your ability to repay. If you are approved for a loan you may be charged a higher interest rate to compensate for what is viewed as a higher risk.

5. Not alerting creditors if you’ve moved: Your bill may arrive late and as a result your payments could be late, potentially damaging your credit score.

6. Registering for too many new credit cards: Consumers who often open new credit cards are viewed as a greater risk than those who don’t.

7. Closing older credit card accounts: Closing older credit card accounts shortens the length of your credit history and this can adversely affect your credit score.

8. Don’t co-sign for someone else’s loan: You could be liable for that person’s debt and damage your credit rating.

9. Don’t share your credit card or social insurance number with anyone: There are a lot of scams abound where people try by phone, email or mail to get your credit card or social insurance number. This can be a fast track to identity theft and financial disaster.

10. Ignoring the warning signs of credit problems: If you have trouble making the minimum payments on time and have maxed out all of your credit, you have serious debt problems.

Serious debt problems need professional help. Contact Ira Smith Trustee & Receiver Inc. and take the first step towards a healthy financial future. Starting Over, Starting Now a debt free life can be yours.