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NAVIGATING ONTARIO’S MORTGAGE DELINQUENCIES: UNDERSTANDING RISING DELINQUENCIES AND ONTARIO’S MORTGAGE CRISIS

mortgage delinquencies

Mortgage Delinquencies Introduction

Have you been keeping up with your bills lately? You might have spotted a troubling trend in financial news. More and more Ontario homeowners are trying to keep up with their mortgage payments. Last quarter alone, over 11,000 mortgage delinquencies were recorded—nearly triple what we saw back in 2022!

I’ve been watching this situation unfold with growing concern. Homeownership has long been considered a cornerstone of financial stability, but that foundation seems increasingly shaky for many families.

In this Brandon’s Blog post, I’m digging into Ontario’s current mortgage crisis to uncover what’s behind these alarming numbers and share some insights that might help if you’re feeling the pinch.

Current State of Mortgage Delinquencies in Ontario

The numbers don’t lie, and they’re pretty sobering. Over 11,000 mortgage delinquencies in just one quarter (Q4 2024) represent almost three times what we saw in 2022. I was shocked when I first came across these statistics.

To put this in perspective, we’re looking at a 50% increase in delinquencies compared to pre-pandemic levels. For homeowners, this signals potentially rough waters ahead. From what I’ve gathered, the primary culprits behind this crisis are the rapid rise in interest rates combined with the sky-high home prices we saw during the pandemic.

  • 11,000 mortgages overdue in Q4 2024
  • 50% jump from pre-pandemic levels

The Bigger Picture

Equifax Canada recently reported a significant uptick in missed payments. But these aren’t just abstract numbers—they represent real families facing financial hardship. Rebecca Oakes, VP of Advanced Analytics at Equifax, put it well when she said:

“The rise in missed payments indicates deeper financial strains among consumers.”

Her words hit home for me. I’ve spoken with several homeowners who bought during the pandemic using variable interest rate mortgages. Many told me they expected rates might rise eventually, but nobody anticipated how quickly they’d shoot up. The result? Most of their monthly payments now go toward interest, with barely anything chipping away at the principal. These families have had to slash their spending and implement strict budgeting just to stay afloat.

The Ripple Effect

Ontario has seen a particularly troubling 90% increase in homeowners falling behind on mortgage payments by 90 days or more—outpacing similar trends in Quebec and British Columbia. Mortgage delinquencies reflect broader economic challenges affecting many households.

For example, the 90-plus day non-mortgage delinquency rate in Ontario jumped by 46.1%. This surge in payment struggles points to a larger issue with non-mortgage debts as well. Consumer debt in Canada has now reached an eye-watering $2.56 trillion, up 4.6% from 2023. That’s an enormous burden for families to carry.

mortgage delinquencies
mortgage delinquencies

Mortgage Delinquencies: What Lies Ahead?

Looking forward, I’m particularly concerned about the wave of mortgage renewals on the horizon. Over 1 million fixed-rate mortgages will come up for renewal in 2025. Many of these were secured when the Bank of Canada’s overnight rate was below 1%—now it stands at 3%. Based on my research, about a quarter of homeowners expect their monthly payments to increase by at least $150 when they renew. Can you imagine suddenly having to find an extra $150+ every month in an already tight budget?

With economic uncertainties looming, understanding your mortgage options becomes crucial. If you’re struggling, please don’t suffer in silence. Financial advice, deferral programs, or support from family and lenders can make a significant difference. In these challenging times, thoughtful financial planning is more important than ever.

As market conditions shift, I expect many distressed homeowners will soon be looking to sell. It’s a tough reality, but awareness and preparation can help navigate these turbulent waters.

Mortgage Delinquencies: Understanding Mortgage Delinquency vs. Default

Definitions and Key Differences

Throughout my years working with homeowners, I’ve noticed considerable confusion between mortgage delinquencies and defaults. Though related, they represent different stages of payment issues with distinct implications.

Mortgage Delinquency happens when you miss a scheduled payment or can’t make the full amount by the due date. Most mortgage agreements include a grace period—typically about 15 days—during which you can still make the payment without being considered delinquent. Once this grace period expires without payment, your mortgage enters delinquency status.

Delinquency is measured in days (30, 60, and 90 days delinquent) and represents the earliest stage of payment problems. It’s an early warning sign but is relatively common and often temporary. I’ve seen many homeowners experience short-term delinquency due to unexpected expenses, simple administrative errors, or temporary income disruptions.

Mortgage Default is more serious and occurs when you’ve failed to comply with your mortgage agreement terms for an extended period. In Canada, a mortgage is typically considered in default when payments are 90+ days past due, though this can vary by lender and province.

Default signals a fundamental breakdown in your ability or willingness to meet mortgage obligations. While delinquency can often be resolved with catch-up payments, default usually requires more significant intervention such as loan modification, forbearance, or in severe cases, power of sale proceedings.

The progression from delinquency to default isn’t automatic—many delinquent mortgages never reach default status as homeowners recover financially or make arrangements with their lenders.

The legal consequences differ significantly between delinquency and default, with much more severe ramifications once a mortgage enters default status. In Ontario, the Mortgages Act governs.

Legal Implications of Delinquency:

  • Credit Reporting: Mortgage delinquencies typically hit your credit bureau once a payment is 30 days late, damaging your credit score. This impact grows the longer the delinquency continues.
  • Late Fees: Lenders can charge late fees as outlined in your mortgage agreement, usually a percentage of the overdue payment or a flat fee.
  • Collection Activities: Expect contact from your lender through phone calls, emails, and formal notices as they try to resolve the situation.
  • Notice of Arrears: In Ontario, lenders may send a formal Notice of Arrears once you miss a payment, documenting the delinquency.

Legal Implications of Default:

  • Notice of Default: Once in default, your lender can issue a formal Notice of Default or issue a Notice of Sale Under Mortgage — the first step toward potential sale or foreclosure.
  • Power of Sale Proceedings: Ontario residential mortgages include Power of Sale provisions. After the time indicated in the mortgage, which can be as little as 15 days after default in making any payment provided for by the mortgage, lenders initiate these proceedings. They then must allow the 45-day statutory redemption period to expire before taking any other action.
  • Acceleration Clause: Upon default, lenders can trigger the acceleration clause in your mortgage agreement, making the entire mortgage balance due immediately rather than just the missed payments.
  • Property Seizure: Default can ultimately lead to the lender taking possession of your property through foreclosure or selling it through Power of Sale proceedings.
  • Deficiency Judgments: If selling your property doesn’t cover the outstanding mortgage balance (including additional default interest, fees and costs), the lender may pursue a deficiency judgment against you for the remaining amount.
  • Legal Fees: As a defaulting borrower, you’re typically responsible for all legal fees and costs associated with default proceedings, which can substantially increase your debt.
  • Long-term Credit Implications: Mortgage default can haunt your credit report for up to 7 years in Canada, severely limiting future borrowing opportunities.

If you’re facing potential delinquency or default, I strongly recommend early consultation with your lawyer and even with a Licensed Insolvency Trustee. Although an insolvency process normally does not deal with secured creditors like a mortgagee, it may be that your financial problems also stretch to unsecured creditor problems, like credit card debt. The Licensed Insolvency Trustee can guide you through options like consumer proposals or other debt relief measures that might help avoid the worst consequences. Eliminating your unsecured debt could be the answer to saving your home.

mortgage delinquencies
mortgage delinquencies

Factors Contributing to Mortgage Delinquencies

Increasing Consumer Debt Levels

From what I’ve seen firsthand, Ontario homeowners are under unprecedented pressure as consumer debt continues to climb. Recent Statistics Canada data shows that the average debt-to-income ratio for Ontario households has reached concerning levels. Many homeowners I’ve spoken with are juggling multiple debts alongside their mortgages—credit cards, car loans, lines of credit, you name it.

This debt stacking creates a precarious situation where even minor income disruptions can trigger a cascade of payment problems. When you’re already allocating a significant chunk of your income to various debts, mortgage payments—typically the largest financial obligation—become increasingly difficult to manage.

I’ve also noticed that the recent proliferation of “buy now, pay later” services and easily accessible credit has further complicated matters. Many homeowners find themselves servicing high-interest short-term debts, diverting funds that would otherwise go toward their mortgage.

Post-pandemic Underwriting Practices

The COVID-19 pandemic created unique conditions in the mortgage market that are now contributing to rising delinquency rates. During the pandemic, many lenders adopted more flexible underwriting standards as interest rates hit historic lows and property values soared.

These pandemic-era mortgages were often approved based on temporarily inflated property valuations and artificially low interest rates. Now that the market is normalizing, homeowners who purchased at the peak face the dual challenge of potentially underwater mortgages and less favourable refinancing options.

Additionally, income verification procedures are sometimes relaxed during the pandemic, particularly for self-employed borrowers or those with non-traditional income sources. Some homeowners were approved for mortgage amounts that, in retrospect, exceeded their sustainable debt capacity.

The aftermath of these lending practices is becoming evident as more homeowners struggle with payment obligations that seemed manageable under different economic conditions.

Rising Costs of Variable-Rate Mortgages

Perhaps the most significant factor driving mortgage delinquencies in Ontario has been the dramatic impact of interest rate increases on variable-rate mortgages. Many homeowners who opted for variable-rate products during the low-interest environment now face substantially higher monthly payments.

To put this in perspective, I recently worked with a family with a $500,000 variable-rate mortgage who secured their loan when rates were near historic lows. They’ve seen their monthly payments jump by nearly $700 as rates climbed. This kind of payment shock has devastated household budgets already stretched thin by inflation in other essential spending categories.

The situation is particularly challenging for first-time homebuyers who entered the market with minimal down payments and maximum amortization periods. These borrowers typically have less equity cushion and fewer options for refinancing or restructuring their debt.

As the trigger rate phenomenon continues to affect variable-rate mortgage holders, many borrowers are discovering that their payments are covering only interest, with no principal reduction occurring. This realization often leads to financial distress and, ultimately, mortgage delinquency if intervention measures aren’t taken promptly.

Mortgage Delinquencies: The Impact of Economic Conditions on Mortgages

Effects of Inflation on Consumer Behaviour

Inflation has emerged as a critical factor influencing mortgage outcomes across Ontario. I’ve watched as the persistent rising inflation rates over the past two years have fundamentally altered how homeowners prioritize spending and manage mortgage obligations.

When inflation drives up the cost of necessities like food, utilities, and transportation, homeowners face difficult financial trade-offs. Many families I’ve counselled find themselves allocating an increasingly larger portion of their income to basic needs, leaving less for mortgage payments. This reprioritization of expenses often happens gradually, with homeowners first cutting discretionary spending before falling behind on secured debt payments.

The “payment hierarchy” theory suggests that consumers typically prioritize payments in order of immediate necessity and consequences. Historically, mortgage payments ranked high in this hierarchy due to the fundamental importance of housing security. However, when inflation significantly impacts essential expenses, I’ve seen this hierarchy shift, with some homeowners choosing to meet immediate needs over making their full mortgage payment.

Bank of Canada statistics indicate that households facing inflation pressures without corresponding income growth are approximately 30% more likely to experience mortgage delinquency. This relationship becomes particularly pronounced when inflation outpaces wage growth for consecutive quarters, as we’ve seen in many regions of Ontario.

Another inflation impact I’ve observed is the reduction in financial buffers. Many Ontario homeowners who previously maintained emergency savings have depleted these reserves due to higher everyday costs, leaving them more vulnerable when unexpected expenses arise. Financial advisors typically recommend keeping 3-6 months of expenses in emergency funds, but recent surveys show over 40% of Ontario mortgagors have less than one month of payment reserves available.

The stability of employment remains perhaps the single most reliable predictor of mortgage payment performance. Ontario’s employment landscape has undergone significant structural shifts that directly impact homeowners’ ability to maintain mortgage payments.

Recent employment data reveals several concerning trends I’ve been tracking:

The growth of precarious employment, including contract, gig, and part-time positions, has created income volatility for many Ontario homeowners. Unlike previous generations who could rely on stable, long-term employment with predictable income, today’s workforce often experiences periods of fluctuation. This irregularity makes consistent mortgage payments challenging, particularly for households that secured mortgages based on income projections that assumed greater stability.

Sectoral shifts in employment have also contributed to mortgage stress. Industries that once provided reliable middle-income employment have contracted, while growth has concentrated in either high-skill positions requiring specialized education or lower-wage service sector jobs. Homeowners caught in these transitions often face income reductions that directly impact affordability calculations based on previous earning levels.

Geographic employment disparities within Ontario further complicate the mortgage landscape. While certain urban centers continue to experience employment growth, several regions face persistently higher unemployment rates. These regional economic differences create “hot spots” of mortgage delinquency in communities where employment opportunities have diminished. Data from the Canada Mortgage and Housing Corporation (CMHC) indicates that areas with unemployment rates exceeding the provincial average by 2% or more typically experience mortgage delinquency rates 40-50% higher than the provincial norm.

The emergence of remote work initially provided flexibility for many households but has since created new vulnerabilities. As companies adjust their remote work policies, some homeowners who relocated to more affordable areas based on remote work assumptions now face difficult commuting situations or potential job transitions, both of which can disrupt income stability and mortgage payment consistency.

For homeowners experiencing employment disruptions, I’ve found that the timing of intervention is crucial. Statistics show that homeowners who contact their lenders within 30 days of employment changes are significantly more likely to secure workable payment arrangements than those who wait until they’ve already missed payments. This highlights the importance of proactive communication between mortgagors and lenders when employment circumstances change.

mortgage delinquencies
mortgage delinquencies

Mortgage Delinquencies: Implications For Homeowners

I recently spoke with Pushkar, a software engineer living in British Columbia. Like many others, he’s feeling the weight of rising interest rates. In August 2022, Pushkar purchased his townhouse with a variable interest rate of 4.8%. At that time, he thought he was making a smart move. But as rates climbed, he quickly realized the reality was far different.

The Financial Strain

By 2023, Pushkar’s situation had changed dramatically. Most of his monthly payments were going toward interest. Only $400 was applied to the principal of his $950,000 mortgage. I remember how stressed he looked when telling me this—watching his hard-earned money disappear into interest payments while barely making a dent in his actual loan balance.

To cope with these rising costs, Pushkar and his family made serious adjustments. They implemented strict budgeting, cutting their spending by $800 each month. This wasn’t just a minor tweak—it was a complete overhaul of their financial lifestyle. They had to prioritize needs over wants, making tough decisions daily about what they could afford.

Emotional Toll

Stories like Pushkar’s highlight the emotional and financial toll of rising costs. It’s not just about numbers on a page. During our conversation, Pushkar confessed to experiencing anxiety and stress that was affecting his sleep and family relationships. The pressure of financial strain can feel isolating, but as I assured him, he’s far from alone in this struggle.

Wider Implications

Pushkar’s experience reflects a broader crisis affecting many homeowners. According to reports I’ve been following, mortgage delinquencies in Ontario have surged dramatically. Over 11,000 mortgages failed to meet at least one payment in the fourth quarter of 2024—nearly three times the amount recorded in 2022.

Rebecca Oakes, Vice President of Advanced Analytics at Equifax, notes that rising home prices and escalating interest rates are significant contributors to this crisis. As more homeowners face financial strain, the emotional burden continues to grow, creating a cycle that can feel unending for those caught in it.

What Can Be Done?

If you’re navigating these challenging times, consider your options. Based on my experience working with homeowners in similar situations, adjusting your budget is a critical first step. Can you identify areas to trim expenses? Are there ways to increase income?

Don’t hesitate to reach out for help. Seeking financial advice, utilizing deferral programs, or even talking to family and lenders might provide some relief. I’ve seen how staying informed and proactive can make all the difference.

Pushkar’s story serves as a reminder of the challenges many face today. While we can’t change the economic landscape overnight, supporting each other through these tough times can make a significant difference. Every story matters—your experience contributes to a larger narrative about resilience and hope in the face of adversity.

Mortgage Delinquencies: Impending Mortgage Renewals Are A Looming Financial Challenge

Are you facing a mortgage renewal soon? You’re not alone. I’ve been tracking the numbers, and over 1 million mortgages are expected to renew in 2025. Many of these were taken out when interest rates were below 1%. Now, as rates continue to rise, the financial landscape is shifting dramatically for many Ontario families.

The Reality of Rising Payments

Last month, I met with a couple who had been comfortably paying their mortgage for years. When we calculated their potential new payment at renewal, they were shocked to discover they’d face a $325 monthly increase. For them, this wasn’t just a minor adjustment but a significant hit to their household budget.

This scenario is playing out across Ontario:

  • Over 1 million mortgages due for renewal in 2025
  • About 25% of homeowners anticipate at least a $150 monthly increase
  • Some will face increases of $300-500 or more
  • Economic uncertainty complicates renewal planning

With the Bank of Canada’s overnight rate now at 3%, the days of ultra-low interest rates seem like a distant memory. For homeowners who secured their mortgages when rates were at historic lows, this change can feel overwhelming. I’ve seen firsthand how essential it is to prepare for the financial implications that come with these adjustments.

Understanding Your Mortgage Terms

As fixed-rate terms approach their end, understanding your renewal options becomes critical. I’ve found that many homeowners don’t fully grasp how their mortgage terms work until they’re facing renewal. The increase in payments will likely compound existing financial strain, especially since many people are already feeling squeezed by rising costs in other areas of their lives.

Rebecca Oakes, VP of Advanced Analytics at Equifax, highlights that the rise in missed mortgage payments indicates deeper financial strains among consumers. The pandemic drove home prices to soar, and now, escalating interest rates are adding to the burden. This situation isn’t just about numbers—it’s about real families making tough choices at kitchen tables across the province.

The Bigger Picture

Remember Pushkar’s story I shared earlier? His experience with variable rates offers a preview of what many fixed-rate mortgage holders will soon face. He had to cut spending by $800 monthly just to manage his payments. This serves as a stark reminder of the financial adjustments many will need to make when their mortgages renew at higher rates.

As I’ve been monitoring these trends, I’m particularly concerned about the troubling rise in mortgage delinquencies. Ontario has seen a 90% increase in homeowners falling behind on payments by 90 days or more. This situation reflects broader economic struggles that could affect many homeowners facing renewal in the coming year.

What Can You Do?

If you’re feeling overwhelmed by an upcoming renewal, you’re not alone. From my experience working with homeowners in similar situations, I strongly recommend seeking assistance before the situation deteriorates. Consider reaching out for financial advice from professionals who understand the current mortgage landscape.

I’ve seen how utilizing deferral programs or getting help from family and lenders can provide the necessary support to manage escalating costs. Understanding your mortgage options and planning your financial future is vital during this uncertain time.

As you prepare for your mortgage renewal, remember that being proactive can make all the difference. Start planning now, even if your renewal is months away. The landscape is changing rapidly, and the sooner you prepare, the better positioned you’ll be to face the challenges ahead.

mortgage delinquencies
mortgage delinquencies

Mortgage Delinquencies: Managing Financial Strain Amid Rising Rates

In my years helping homeowners navigate financial challenges, I’ve seen how rising mortgage rates can squeeze even the most carefully planned budgets. While the situation may seem overwhelming, I’ve found there are practical strategies that can help manage this strain effectively.

Budgeting has proven to be the most powerful tool in my financial toolkit. When working with clients, I always start by helping them track where their money goes. You might be surprised at what you discover when you look closely at your spending patterns. Here’s the approach I recommend:

  • List Your Income: Write down everything coming in, including side gigs or occasional earnings.
  • Track Your Expenses: For at least two weeks, record every dollar you spend. Those coffee runs and subscription services add up faster than you think!
  • Identify Needs vs. Wants: This is often the hardest part. I had one client who saved $300 monthly just by honestly separating essential expenses from nice-to-haves.
  • Set a Budget: Create realistic spending targets for each category and stick to them. I’ve found that using cash for certain categories helps many people stay on track.

Beyond budgeting, I’ve seen tremendous value in professional financial advice. A good financial advisor can spot opportunities you might miss and provide tailored guidance based on your unique situation. One of my clients discovered they qualified for a tax credit they hadn’t been claiming, putting an extra $2,200 back in their pocket annually.

For immediate relief, don’t overlook deferral programs. Many lenders offer temporary payment adjustments when you’re experiencing short-term financial difficulties. I recently helped a family secure a three-month partial deferral that gave them breathing room to get back on their feet after a medical emergency.

Don’t Hesitate to Seek Help

Pride can be expensive. I’ve seen too many people damage their financial futures by waiting too long to ask for help. Family and friends can be invaluable resources—not just for possible financial assistance but also for emotional support and practical advice. Sometimes, just talking through your situation can reveal solutions you hadn’t considered.

I always emphasize the importance of contacting your lender proactively. In my experience, lenders are far more willing to work with borrowers who approach them before missing payments. Many have hardship programs that aren’t widely advertised but can be accessed if you ask.

Stay Informed About Mortgage Options

With so many fixed-rate mortgages coming up for renewal soon, understanding what to expect is crucial. I’ve been helping clients explore alternatives like extending amortization periods to lower monthly payments or considering a blend-and-extend option if that makes sense for their situation.

As one financial expert, I work with often says,

“Navigating these times requires proactive measures to maintain financial health.”

This couldn’t be more true—waiting until you’re in crisis mode limits your options significantly.

Empower Yourself with Knowledge

I’m a firm believer that financial education is key to weathering economic challenges. When I teach financial literacy workshops, I see how empowering it is when people truly understand their mortgage terms, interest calculations, and available options.

Take some time to learn about financial strategies and mortgage alternatives. Knowledge truly is power when it comes to your financial well-being. I’ve seen how even a basic understanding of financial concepts helps people make better decisions and feel more in control during uncertain times.

In conclusion, managing financial strain amid rising rates isn’t impossible. By implementing thoughtful budgeting strategies, seeking help when needed, staying informed about your options, and investing in your financial education, you can navigate these challenging times. Remember, proactive measures today can prevent major problems tomorrow.

7 Steps for Canadians Facing Mortgage Payment Difficulties or Mortgage Delinquencies

Over the years, I’ve worked with countless homeowners struggling to keep up with their mortgage payments. If you’re finding it hard to make ends meet, here are seven critical steps I recommend taking before the situation worsens:

1. Contact Your Lender Immediately

This is the step most people avoid, but it’s the most important one. In my experience, lenders are far more willing to work with you when you reach out before missing payments. Last year, I helped a client negotiate a short-term payment reduction after she proactively contacted her bank about an upcoming job transition.

Most Canadian financial institutions offer various hardship programs that might include:

  • Short-term payment deferrals
  • Extended amortization periods to lower monthly payments
  • Interest-only payment arrangements
  • Special repayment plans for catching up on missed payments
  • Mortgage restructuring options

Early communication demonstrates good faith and gives you access to more options than if you wait until you’re already behind.

2. Seek Professional Financial Advice

The right professional guidance can make all the difference. Consider consulting:

  • A Licensed Insolvency Trustee who can provide a comprehensive assessment of your entire financial situation and explain all your legal options
  • A non-profit credit counsellor who can help create a budget and debt management plan
  • A mortgage broker who might identify refinancing options you haven’t considered

I recently worked with a family who thought bankruptcy was their only option, but after consulting with us, they discovered a consumer proposal would allow them to keep their home while addressing their unsecured debt problems.

3. Explore Government Assistance Programs

Don’t overlook potential help from government programs. Several Canadian options may assist:

  • The First-Time Home Buyer Incentive (if eligible)
  • Provincial emergency housing benefit programs
  • Tax credits or rebates you might not be claiming
  • Employment Insurance if job loss is a factor

One client I worked with discovered they qualified for a provincial deferral program that freed up $325 monthly in their budget—enough to help them manage their mortgage payment increase.

4. Consider Formal Debt Relief Options

If your financial situation is severe, you might need to explore more structured solutions:

  • Consumer Proposal: A legally binding arrangement where you pay back a portion of your unsecured debt
  • Bankruptcy: A last resort that provides debt relief but has significant impacts on credit
  • Mortgage forbearance agreements through your lender
  • Selling your home to use the equity for a fresh start in a rental while paying down other debts

Each option has pros and cons that should be carefully weighed with professional guidance.

5. Evaluate Housing Alternatives

Sometimes the most practical solution involves making changes to your housing situation:

  • Renting out a portion of your home to generate additional income
  • Selling and downsizing to a more affordable property
  • Considering a voluntary sale to avoid foreclosure proceedings

I’ve seen how renting out a basement apartment helped one family earn an extra $1,200 monthly—enough to bridge their payment gap and keep their home.

6. Protect Your Credit Where Possible

Even during financial hardship, try to minimize damage to your credit:

  • Maintain communication with all creditors
  • Get payment arrangements in writing
  • Keep detailed records of all communications
  • Regularly monitor your credit report for accuracy

Taking these steps can make rebuilding your financial health easier once you’ve weathered the current storm.

7. Create a Strict Budget and Spending Plan

Develop what I call a “crisis budget” that:

  • Prioritizes secured debts like your mortgage
  • Eliminates all non-essential spending
  • Redirects available funds to housing costs
  • Identifies additional income opportunities

One family I worked with found an additional $475 monthly just by implementing a strict temporary budget—enough to keep them in their home while they addressed their broader financial challenges.

The most important takeaway is that proactive action significantly improves outcomes. Many Canadians successfully navigate mortgage difficulties with the right support and information. Don’t wait until you’re already behind—the sooner you take action, the more options you’ll have.

mortgage delinquencies
mortgage delinquencies

Mortgage Delinquencies: Insights for Financial Institutions

Risk Assessment and Management Strategies

Throughout my career working with both borrowers and lenders, I’ve observed that financial institutions in Ontario face increasing challenges in managing mortgage portfolios amid evolving economic conditions. Traditional risk assessment models that serve well in stable environments are proving insufficient in today’s landscape, necessitating more sophisticated approaches.

Forward-looking risk management requires lenders to implement early warning systems that detect subtle indicators of potential mortgage distress. These indicators often precede actual payment delinquency and may include:

  • Patterns of decreasing savings account balances
  • Increased utilization of revolving credit lines
  • Changes in transaction patterns showing greater reliance on credit for everyday expenses
  • Irregular payment timing even when full payments are eventually made
  • Increases in NSF incidents across banking products

The most progressive institutions I’ve worked with are incorporating these behavioural metrics into dynamic risk-scoring models that supplement traditional credit bureau data. This approach allows for more proactive intervention before a mortgage enters formal delinquency status.

Portfolio stress testing has also evolved considerably. Rather than applying uniform interest rate shocks across all mortgages, sophisticated lenders now conduct segmented stress tests that consider regional economic variations, employment sector vulnerabilities, and debt-to-income ratios specific to customer segments. This granular approach enables more targeted risk mitigation strategies.

The variable-rate mortgage segment requires particular attention in the current environment. I’ve helped financial institutions develop specialized monitoring protocols for variable-rate mortgages approaching their trigger rates. Identifying these high-risk scenarios and initiating contact with affected borrowers before payment disruptions occur can significantly reduce default rates.

For mortgages already showing signs of stress, a graduated response framework that includes multiple intervention options beyond the binary choices of foreclosure or maintaining the status quo has proven most effective. These might include:

  • Term extensions to reduce monthly payment obligations
  • Interest rate modifications for temporary hardship cases
  • Principal forbearance options with catch-up provisions
  • Targeted refinancing programs for qualified borrowers

Institutions that develop comprehensive, flexible approaches to mortgage distress will not only minimize losses but also maintain stronger customer relationships through difficult economic cycles.

Importance of Customer Outreach and Support

Proactive customer engagement has emerged as a critical factor in managing mortgage delinquency. My research and experience consistently demonstrate that early, empathetic communication with borrowers facing financial challenges significantly improves outcomes for both customers and financial institutions.

Effective customer outreach programs should be initiated before formal delinquency occurs. Data analytics can identify customers exhibiting early warning signs of financial stress, allowing institutions to initiate supportive communication framed as financial wellness check-ins rather than collections activities. This approach reduces the stigma associated with financial difficulty and increases customer receptivity.

Financial literacy support represents another valuable intervention strategy. Many borrowers experiencing payment challenges benefit from education regarding:

  • Budgeting techniques during inflationary periods
  • Strategies to prioritize debts effectively
  • Available government assistance programs
  • Options for mortgage modification
  • Long-term consequences of various financial decisions

Institutions that provide these educational resources demonstrate commitment to customer success while simultaneously improving repayment outcomes.

Communication channels and timing also significantly impact customer engagement effectiveness. Multi-channel approaches that combine traditional methods (letters, phone calls) with digital touchpoints (secure messaging, mobile app notifications, email) show higher response rates than single-channel strategies. Additionally, institutions should analyze customer behavioural data to identify optimal contact times that increase the likelihood of meaningful engagement.

When developing specialized support teams for mortgage assistance, training should emphasize both technical knowledge and emotional intelligence. Staff members who can explain complex financial concepts while demonstrating genuine empathy create more productive interactions with customers facing financial stress.

Financial institutions should also consider implementing dedicated mortgage modification specialists who can rapidly assess customer situations and offer appropriate solutions. These specialists require the authority to approve reasonable modifications without excessive approval layers that can delay assistance until a customer’s situation has deteriorated further.

The reputational benefits of effective customer support during financial hardship should not be underestimated. Institutions that demonstrate a genuine commitment to helping customers navigate difficult periods build lasting loyalty that extends beyond the mortgage relationship.

Frequently Asked Questions: Ontario’s Mortgage Crisis

What is the current state of mortgage delinquencies in Ontario?

Ontario is experiencing an alarming surge in mortgage delinquencies. As of Q4 2024, over 11,000 Ontario mortgages are delinquent (meaning at least one missed payment). This represents nearly triple the number recorded in 2022 and a 50% increase compared to pre-pandemic levels. Most concerning is the 90% increase in homeowners falling behind on mortgage payments by 90 days or more—a trend outpacing similar situations in Quebec and British Columbia.

What factors are driving the rise in Ontario mortgage delinquencies?

The current mortgage crisis in Ontario stems from several interconnected factors:

  • Interest rate increases: The rapid rise in rates has dramatically increased monthly payments, particularly for variable-rate mortgage holders
  • Pandemic-era purchasing decisions: High home prices during the pandemic, combined with more flexible underwriting standards, left many homeowners overextended
  • Rising consumer debt burdens: Inflation has driven up costs for necessities, making it increasingly difficult for homeowners to prioritize mortgage payments
  • Employment challenges: Shifting employment trends have further complicated homeowners’ ability to maintain consistent payments
  • Cumulative inflation effects: Prolonged inflation has eroded household purchasing power, affecting overall financial stability

What’s the difference between mortgage delinquency and default in Ontario?

Mortgage Delinquency:

  • Occurs when a payment is missed or not made in full by the due date
  • Most Ontario lenders provide a grace period (typically 15 days) before officially marking a mortgage as delinquent
  • Results in credit reporting damage, late fees, and preliminary collection activities

Mortgage Default:

  • More serious condition occurring after prolonged non-compliance (typically 90+ days past due)
  • Triggers a formal Notice of Default from the lender
  • This can lead to power of sale proceedings where the lender sells the property
  • This may result in the acceleration of the entire mortgage balance
  • This can lead to property seizure and potential deficiency judgments if the sale doesn’t cover outstanding debt
  • Causes significant long-term damage to credit scores and borrowing capacity

How will impending mortgage renewals affect Ontario homeowners?

Ontario faces a significant mortgage renewal challenge in 2025, with over 1 million mortgages due for renewal. Many of these were secured when interest rates were below 1%. With the Bank of Canada’s overnight rate now at 3%, homeowners face substantially higher monthly payments. Industry estimates suggest approximately 25% of Ontario homeowners will experience increases of at least $150 per month, with some facing $300-$500 or more in additional monthly costs.

What steps should Ontario homeowners take to prepare for mortgage renewal?

Homeowners approaching renewal should:

  • Review their current mortgage terms and understand their options
  • Seek professional financial advice from mortgage brokers or financial advisors familiar with Ontario’s market
  • Explore deferral programs offered by their specific lender
  • Consider family support options if available
  • Adjust household budgets to accommodate potential payment increases
  • Begin planning 6-12 months before renewal to maximize preparation time
  • Compare rates across multiple lenders rather than automatically renewing with their current institution

What practical strategies can help manage financial strain amid rising mortgage rates?

Ontario homeowners facing financial pressure should consider:

  • Comprehensive budgeting: Track all income and expenses, distinguish needs from wants, and set realistic spending targets tailored to current financial reality
  • Professional financial consultation: Seek advice from Ontario-based financial advisors who understand the provincial housing landscape
  • Explore lender programs: Many Ontario lenders offer hardship or deferral programs specific to the current market conditions
  • Support networks: Don’t hesitate to discuss options with family members who might offer temporary assistance
  • Mortgage restructuring: Consider extending amortization periods or exploring alternative mortgage products that might reduce monthly payment obligations

What formal debt relief options exist for struggling Ontario homeowners?

When financial challenges become severe, Ontario homeowners should explore structured solutions:

  • Consumer proposals: Legally binding arrangements through a Licensed Insolvency Trustee to repay a portion of unsecured debt while protecting your home
  • Bankruptcy protection: A last resort with significant credit implications, but which provides a fresh start when other options aren’t viable
  • Mortgage forbearance: Temporary payment relief arrangements negotiated directly with your lender
  • Strategic property disposition: Selling your home to utilize equity before facing the power of sale proceedings
  • Ontario’s Landlord and Tenant Board processes: Understanding options if converting to a rental property with secondary suites to generate income

What immediate steps should homeowners take when struggling with mortgage payments?

If you’re facing payment difficulties:

  1. Contact your lender before missing any payments—proactive communication significantly increases available options.
  2. Document your financial situation clearly to present to your lender.
  3. Consult with a Licensed Insolvency Trustee or non-profit credit counsellor in Ontario.
  4. Explore lender hardship programs that may include payment deferrals, extended amortization periods, or interest-only arrangements.
  5. Prepare a realistic budget showing your capacity to manage modified payment arrangements.

How can financial institutions better support Ontario customers facing mortgage difficulties?

Financial institutions serving Ontario can improve their response through:

  • Implementing early warning systems to detect signs of mortgage distress specific to Ontario’s market.
  • Conducting regionally-focused stress tests that account for Ontario’s unique housing dynamics.
  • Developing specialized monitoring for variable-rate mortgages approaching trigger rates.
  • Creating graduated response frameworks including term extensions and interest modifications.
  • Offering principal forbearance and targeted refinancing programs.
  • Enhancing proactive customer engagement before delinquency occurs.
  • Providing Ontario-specific financial literacy resources.
  • Training staff in empathetic communication techniques for difficult financial conversations.

Mortgage Delinquencies: Conclusion

Ontario’s mortgage delinquency rates continue their troubling climb, with over 11,000 mortgages failing to meet payments in Q4 2024 alone. Throughout this post, I’ve explored the various causes behind this crisis, shared individual stories from people I’ve worked with, and provided practical advice for navigating these challenging financial waters.

I hope you’ve found this exploration of mortgage delinquencies helpful. If you or someone you know is struggling with too much debt, remember that the financial restructuring process, while complex, offers viable solutions with the right guidance.

At the Ira Smith Team, we understand both the financial and emotional components of debt struggles. We’ve seen how traditional approaches often fall short in today’s economic environment, which is why we focus on modern debt relief options that can help you avoid bankruptcy while still achieving financial freedom.

The stress of financial challenges can be overwhelming. We take the time to understand your unique situation and develop customized strategies that address both your financial needs and emotional wellbeing. There’s no “one-size-fits-all” approach here—your financial solution should be as unique as the challenges you’re facing.

If any of this sounds familiar and you’re serious about finding a solution, reach out to the Ira Smith Trustee & Receiver Inc. team today for a free consultation. We’re committed to helping you or your company get back on the road to healthy, stress-free operations and recover from financial difficulties. Starting Over, Starting Now.

The information provided in this blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc., and any contributors do not assume any liability for any loss or damage.

mortgage delinquencies
mortgage delinquencies
Categories
Brandon Blog Post

GOOD CREDIT SCORE MASTERY: A STEP-BY-STEP GUIDE TO ACHIEVING FINANCIAL FREEDOM

good credit score

Good Credit Score: Introduction

Have you ever received your credit score and felt a mix of anxiety and confusion? I remember sitting on my couch, staring at those three digits like they held the keys to my financial future. Well, it turns out they do!

Join me as we explore the intricate world of credit scores, unveiling unexpected truths and strategies to getting a good credit score, that can transform how you manage your finances.

Good Credit Score: The Basics – What is a Credit Score?

When I first heard about credit scores, I thought, what exactly does that number signify? A credit score is a three-digit number that reflects our financial reliability, primarily based on our borrowing and repayment history. It’s a critical piece of our financial identity that we often overlook. But let’s dive deeper into the essence of a credit score and what it truly means.

Understanding the Definition of a Credit Score

A credit score ranges from 300 to 900. This number is not just arbitrary; it comes from a credit scoring model using tried and true credit scoring formulas. The calculated number represents how trustworthy we are when it comes to handling borrowed money. Potential lenders, in turn, evaluate these scores to determine how risky it may be to give us a loan or credit. I find it fascinating how this little number can open or close doors in our financial lives.

So, why is this score so important? It’s described as a financial snapshot. Think about it: if we picture our financial behaviours as a photo, our credit score is the snapshot that reveals our payment history, credit utilization rate, credit mix, length of credit history, and recent inquiries. It’s like a report card for our finances!

Factors Affecting Good Credit Scores and How It Serves as a Tool for Lenders

But how does this impact us? Well, lenders rely heavily on credit scores. They use these scores not only to judge whether we will get approved for a loan but also to decide the interest rates we might face. A good credit score often translates into lower rates. Isn’t it interesting how something we rarely think about can affect our wallets so intensely?

To further unpack this, here are the five core factors that contribute to our credit scores:

  • Payment History: This is the most critical factor. Late payments are red flags, signalling a higher risk to lenders.
  • Credit Utilization: This refers to how much of your available credit you’re using. Maintaining a lower utilization rate can positively impact your score.
  • Credit Mix: Having a diverse portfolio of types of credit products, such as credit cards, auto loans, other personal loans, lines of credit and mortgages, shows that we can manage various forms of debt responsibly.
  • Length of Credit History: This reflects how long our accounts have been active. Surprisingly, closing old accounts can shorten our credit history, potentially dragging down our score.
  • Recent Inquiries: Every time we request credit, it could lower our score slightly, but multiple requests for various loans in a short time frame are grouped to minimize the impact.

Understanding these components is empowering. It’s like gaining a set of tools to improve our financial picture one day at a time.

Quotes for Inspiration

Your credit score is like a financial report card.

I couldn’t agree more. This “report card” reflects our past decisions and significantly influences our future options. Isn’t it incredible that from just one score, lenders can gauge our financial responsibility?

A Deeper Look at Good Credit Scores

As we journey through understanding credit scores, we start seeing that these numbers are more than just statistics. They represent our financial habits and choices. Small, consistent actions can lead to improvements. For instance, setting up payment reminders can help ensure we never miss a due date again.

Another lightbulb moment came to me when I learned about the strategy of becoming an authorized user on someone else’s credit card. This allows us to benefit from their positive credit history. Just like that, a simple choice can positively influence our scores.

Regularly reviewing my credit report is now a part of my routine too. We are entitled to a free credit report annually from each of our two major credit bureaus; Equifax Canada and TransUnion. This enables us to identify and dispute potential errors. This is an empowering step to ensure our scores accurately reflect our financial behaviours.

In summary, appreciating what a good credit score is and how it functions is a game changer. It transforms a source of anxiety into something we can actively manage. By choosing to understand and improve our scores, we pave the way for better financial opportunities and decisions.

good credit score
good credit score

The Impact of Your Credit Score on Life Decisions

Have you ever stopped to think about how much your credit score influences your life? It’s a powerful number, often lurking in the shadows of our financial choices. In reality, your credit score acts like a financial report card, detailing how reliably you manage money. And it can impact various aspects of your life in significant ways.

1. Loan Approvals and Interest Rates

Let’s talk about loans. Having a good credit score can work in your favour when you’re looking to borrow money. Lenders typically see higher scores as a sign that you’re a responsible borrower, which can increase your chances of getting approved for a loan.

Approval Chances: A higher credit score significantly boosts your chances of approval.
Interest Rates: With a good credit score, you are likely to qualify for lower interest rates, which can lead to considerable savings over time.

A better score can save you thousands throughout a loan.

So, how do you keep your credit score in good shape? The key is to make your payments on time. Think of it like taking care of a plant; if you ignore it, it won’t thrive. Late payments can damage your credit score, so it’s important to stay on top of them.

2. Impact on Renting Apartments

Next, we explore the impact of renting apartments. Many landlords perform credit checks as part of their application process. Here’s where a good credit score can make a difference.

  • Application Success: A good credit score can tilt the odds in your favour when it’s time to secure the perfect apartment.
  • Security Deposits: Higher scores might even lead to lower security deposits. A landlord sees you as a lower credit risk tenant.

As we navigate the rental community, we realize that

“It can influence everything from renting an apartment to even landing a job.”

Your credit score isn’t just a number; it’s a key that unlocks doors—or, in some cases, locks them shut.

3. Influence on Job Prospects

Believe it or not, your credit score can even affect your job prospects. While not all employers check credit scores, those in certain industries do. For example, financial institutions often look for a history of responsible credit management when hiring.

  • Job Applications: A poor credit score could run the risk of disqualifying you from certain positions.
  • Trust Factor: Employers want to know that you’re trustworthy with money—especially if you’re handling theirs.

Taking responsibility for your credit score is about more than just numbers. It’s about securing your future, whether it’s a new apartment or that job you’ve been dreaming of.

4. Other Influences

As if those factors weren’t enough, let’s talk about how your credit score can also influence your insurance premiums. Many insurance companies check your credit history. A lower score might lead to higher rates.

Ultimately, one thing is clear: a good credit score often translates to better financial opportunities. Just like a compass directing you to your destination, your credit score guides you in the right direction toward your financial goals.

In conclusion, starting to manage your credit responsibly is important. Little efforts can produce big results. So, let’s take charge—whether it’s changing payment habits or conducting a regular credit report check. Our credit scores are a reflection of our financial journey, and we have the power to shape that journey.

Decoding the Factors Affecting Credit Scores: What Goes Into Your Credit Score?

As I embarked on my journey to understand credit scores, I found myself face-to-face with a complex yet fascinating concept. Credit scores influence many aspects of our lives—from loan approvals to renting an apartment, and even landing a job. But what exactly is a credit score? Imagine it as your financial report card, reflecting how reliably you’ve borrowed and repaid money over time. This three-digit number holds the key to unlocking various financial opportunities.

The Major Components of a Credit Score

There are five essential building blocks of your credit score:

  • Payment History
  • Credit Utilization
  • Credit Mix
  • Length of Credit History
  • Hard Credit Inquiries

Let’s dive deeper into these components. First up, is payment history. This is the most significant factor; it accounts for a whopping 35% of your score! It’s like the backbone of your credit score. Late or missed payments stand out vividly to lenders, waving a big red flag. As I’ve learned, “Without a doubt, it’s your payment history.” A consistent habit of on-time payments can create an aura of reliability around you.

good credit score
good credit score

Detailing Payment History and Its Importance

Why is payment history so crucial? Think about it this way: if you were a lender, wouldn’t you want to know how likely you are to get your money back? That’s why evaluating a borrower’s payment habits is essential. Late payments negatively affect your score; they’re like stains on a pristine shirt. It takes a lot longer to clean up that mess than to keep it clean in the first place.

So, what can you do? Establishing reminders through your bank’s online platform or using calendar alerts can be life-saving. By maintaining consistent, on-time payments, you’re crafting a positive credit history that speaks volumes about your financial responsibility.

Understanding Credit Utilization

Next, let’s focus on credit utilization. This term refers to the percentage of your available credit that you’re currently using. It’s not just about how much debt you have; it’s about the percentage of that debt to your total credit limit. Now you can see why it’s important! As I learned, “It’s about the percentage, not just the raw amount of debt.”

Maintaining a low credit utilization ratio is indicative of responsible credit management. A widely accepted guideline is to keep this percentage below 30%. For instance, if you have a credit limit of $10,000, it is advisable to maintain your balance below $3,000. This practice signals to lenders that you represent a lower risk.

Credit Utilization Calculation

Example Amount

Total Credit Limit

Utilization Ratio

Current Balance

$2,500

$10,000

25%

Current Balance

$4,000

$10,000

40%

The table clearly shows that how you manage your balances can have a big impact on your credit score. Keeping your balances low is important for maintaining a good credit score over time.

Putting It All Together

Understanding the major components—payment history and credit utilization—forms a solid foundation for navigating the credit landscape. I realized that taking control of my credit score does not mean chasing perfection. Instead, small, consistent efforts can lead to immense improvements over time. Whether it’s paying your bills on time or actively managing your credit utilization, embracing these practices empowers you to take charge of your financial future.

In this journey, I’ve transformed my perception of credit scores from anxiety to empowerment. By digging deep into these factors, I’m reshaping my financial narrative. Credit scores may seem daunting, but with the right knowledge, we can navigate them confidently, building the foundation for a brighter financial future.

good credit score
good credit score

Strategies for Improving Your Credit Score

Improving your credit score may seem like a daunting task. However, I’ve learned that you don’t always need drastic changes to see results. Instead, it’s often about establishing simple, healthy financial habits that can produce long-lasting improvements. Let’s delve into some effective strategies that can help boost your chances of establishing a good credit score.

1. Establishing Consistent Payment Habits

One of the most critical factors to having a good credit score is your payment history. It’s like the bedrock upon which your credit score is built. Late payments? They’re big red flags to lenders. How can we ensure our payments are always on time? Setting up payment reminders can be a game-changer. Whether through your bank’s online platform or handy calendar alerts, these reminders can prevent missed due dates. Suddenly, what seemed like a chore became manageable with a few simple tweaks.

Consistency is key. I discovered that if we focus on making payments on time, we can create a positive ripple effect in our credit history. Imagine your score gradually inching up each month as you stay committed to timely payments. The quote

“Small changes can make a huge difference.”

resonates deeply here. Indeed, it’s those tiny, consistent actions that lead to substantial improvements over time.

2. Managing Credit Utilization Effectively

Next up is credit utilization. Have you ever heard that phrase before? It’s all about understanding the amount of credit we are using against our total available credit. Lenders love it when you keep your utilization low. Think of it this way: imagine you own a store, and you’ve got a massive warehouse full of goods. If you’re selling only a tiny fraction of those goods, it shows you manage your inventory well. Similarly, keeping your credit utilization below 30% can portray you as a low-risk borrower. It’s essential to monitor how much of your available credit you’re using.

  • Reduce high-balance credit card accounts to improve your utilization ratio.
  • Consider requesting higher credit limits, but do so wisely.
  • Avoid closing old accounts, as they can help maintain a higher total available credit amount.

Managing your credit as a reflection of your financial accountability helps lenders see your reliability.

The most significant improvements often come from focusing on the fundamentals.

In this case, keeping a close eye on credit utilization certainly feels fundamental.

3. Becoming an Authorized User on a Trusted Account

Another powerful strategy involves becoming an authorized user on someone else’s credit card. Now, this isn’t just a simple favour; it’s a strategic move! By being added to a trustful individual’s account, you can inherit their positive payment history, provided the account remains in good standing.

Think of it like being an apprentice. You learn from the best and get to benefit from their experience. Be sure to communicate openly with the account holder, ensuring they maintain their end of the bargain by making timely payments—after all, their actions directly impact your credit score.

Improving your credit score does not require drastic shifts in your financial routine. Remember these essential strategies:

  • Establish consistent payment habits to boost your payment history.
  • Manage your credit utilization effectively to depict fiscal responsibility.
  • Become an authorized user of a trusted account to benefit from positive credit behaviours.

By incorporating these strategies into your daily financial habits, you pave the way toward a robust credit profile. A strong and good credit score can enhance numerous aspects of life—from lower loan interest rates to better job opportunities.

Let’s embark on this journey toward financial strength together, understanding that every small step taken contributes to our overall success. Each decision we make brings us closer to financial empowerment.

Expert Insights For a Good Credit Score: Common Myths and Misconceptions about Credit Scores

Understanding credit scores is essential for anyone trying to manage their finances better. Many of us grow up hearing various myths and misconceptions about these three-digit numbers. But what if I told you that some of these beliefs are not true? I am passionate about debunking these myths because I’ve seen how they can lead to poor financial decisions. Let’s dive into two major misconceptions surrounding credit scores: closing old accounts and understanding hard versus soft inquiries.

1. Debunking the Myth of Closing Old Accounts

One common myth is that closing old credit accounts can simplify your finances. It sounds logical, doesn’t it? Why keep accounts you don’t use? However, closing older accounts can harm your credit score. This is because it negatively impacts your average credit age. Your credit score is influenced by several factors, and one key component is how long you’ve held your credit accounts. The longer your credit history, the better your score tends to be.

Imagine you’re building a portfolio of achievements throughout your life. Each new accomplishment adds to your reputation. Similarly, every year an account stays open and contributes to your financial history. So, ask yourself: why would you want to erase your past accomplishments?

Instead of closing old accounts, consider keeping them open—perhaps just setting them aside for emergencies. The positive impact on your credit score can be significant. Not only does it help your average credit age, but it also increases your total available credit, which can further enhance your credit utilization ratio.

“It’s all about the long game with credit.”

2. Understanding Hard Inquiries vs. Soft Inquiries

Another area clouded in credit checks confusion is the difference between hard inquiries and soft inquiries. Knowing the distinction is essential for making informed decisions about your credit. So, let’s clear up the fog.

  • Soft Inquiries: These occur when you check your credit score or when companies do a background check without your permission. Soft inquiries do not impact your score.
  • Hard Inquiries: These happen when a lender checks your credit report to make a lending decision. Hard inquiries typically stay on your report for about two years—however, they tend to have a minimal impact if you practice good credit habits.

Think of it this way: if checking your credit report is like glancing at the weather, a hard inquiry is more like getting caught in a storm. It has a more lasting effect, but it will pass if you take care of your credit health.

Creating a strategy for managing these inquiries is vital. I learned that if you’re shopping for a loan, it’s wise to limit hard inquiries. Most lenders will group inquiries made within a short period for the same type of loan. This means you can effectively “rate shop” without all your inquiries adding up to a detrimental effect on your score.

good credit score
good credit score

Good Credit Scores FAQ

  1. What is a credit score? A credit score is a numerical representation of your creditworthiness, reflecting your ability to repay debts and manage financial obligations. Lenders, landlords, and even potential employers may use your credit score to assess your financial responsibility.
  2. How does my payment history affect my credit score? Your payment history is the most crucial factor. Late payments, missed payments, collections, and bankruptcies can severely damage your credit score. It’s essential to prioritize paying bills on time to maintain a good credit history.
  3. What is credit utilization and why is it important? Credit utilization is the ratio of your credit card balances to your total credit limit. A high credit utilization ratio suggests you’re relying heavily on credit, which can negatively impact your score. Aim to keep your utilization below 35% for a healthy credit profile.
  4. Does closing old credit accounts help my credit score? Contrary to popular belief, closing old accounts can hurt your score. It shortens your credit history length and can increase your credit utilization ratio if you have outstanding balances on other cards. It’s generally best to keep old accounts open, even if you don’t use them frequently.
  5. What’s the difference between a hard inquiry and a soft inquiry? Hard Inquiry: Occurs when you apply for credit and the lender checks your credit report. These inquiries can slightly lower your score. Soft Inquiry: Occurs when you check your credit report or a company checks your credit for pre-approval offers. Soft inquiries don’t affect your credit score.
  6. How can I improve my credit score? Improving your credit score takes time and effort. Focus on consistently paying bills on time, reducing your credit card balances, and avoiding unnecessary credit applications. Regularly monitoring your credit report can help identify areas for improvement.
  7. Where can I access my credit report? You can obtain your credit report for free from both Equifax and TransUnion, Canada’s two national credit bureaus. Review your report for any inaccuracies and dispute any errors to ensure the information is up-to-date and correct.
  8. What are the key factors influencing my credit score? Five main factors determine your credit score:
  • Payment History: Paying bills on time demonstrates responsible credit management and significantly impacts your score.
  • Credit Mix: Having a variety of credit accounts (e.g., credit cards, loans) shows you can handle different types of credit responsibly.
  • Credit Utilisation: This refers to the percentage of your available credit you’re currently using. Keeping it below 35% is recommended.
  • Credit History Length: A longer credit history generally reflects greater financial experience and can positively impact your score.
  • Credit Inquiries: Applying for new credit results in inquiries on your report. Too many inquiries in a short period can lower your score.

Good Credit Score Final Thoughts

In summary, many misconceptions about credit scores can easily mislead us. Closing old accounts to simplify finances is counterproductive and can negatively affect our average credit age. Likewise, understanding the nuances between hard and soft inquiries is crucial for informed decision-making. These misunderstandings often leave people feeling lost in a sea of financial uncertainty.

Education is key. By understanding these aspects, you can take proactive steps to manage your credit wisely. I now realize that small, consistent efforts can lead to significant improvements in my credit score. It’s empowering to know that I have control over my financial future, and that’s a lesson I think everyone should embrace!

I hope you enjoyed this good credit score Brandon’s Blog. Do you or your company have too much debt? Are you or your company in need of financial restructuring due to distressed real estate or other reasons? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or someone with too much personal debt.

You are worried because you are facing significant financial challenges. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding the bankruptcy process. We can get you debt relief freedom using processes that are a bankruptcy alternative.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a plan, we know that we can help you.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious about finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation. We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The information provided in this Brandon’s Blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content of this Brandon’s Blog should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc. as well as any contributors to this Brandon’s Blog, do not assume any liability for any loss or damage resulting from reliance on the information provided herein.

good credit score
good credit score
Categories
Brandon Blog Post

MAXED OUT CREDIT? YOU NEED TO KNOW HOW TO INCREASE CREDIT SCORE: OUR 13 INTRIGUING TIPS TO IMPROVE YOUR CREDIT SCORE

Our mission includes helping you know how to increase credit score with our free online course

The objective of this Brandon’s Blog is to furnish readers with comprehensive insights on improving their credit rating, alongside introducing them to our complimentary no-cost e-learning module, “How to Increase Credit Score: How To Improve Your Canadian Credit Score”. This user-friendly course provides a definitive guide on increasing your credit score, thereby paving the way for better financial prospects. The brief video above describes the course and how you can access it.

This Brandon’s Blog provides highlights common problems faced by those with low credit scores, including being declined for credit or having to pay high-interest rates. I also provide valuable tips on how to increase credit score. The focus is primarily on the significance of maintaining a good credit score in order to get approval for reasonably priced loans, mortgages, or credit cards.

Explanation of maxed-out credit: Know how to increase credit score

Maxed-out credit happens when an individual has reached their credit limit and is unable to borrow any more and make further purchases. It results in high-interest rates, missed payments, and damaged credit scores. However, there are effective ways to increase your credit score and eliminate debt. This Brandon’s Blog, combined with our free e-learning course, delivers easy-to-understand strategies and expert counsel to equip consumers with everything they need to know to improve their credit scores to unlock better financial prospects.

Through the knowledge I am sharing, individuals can successfully navigate the complex world of credit ratings and experience marked improvements in their daily lives. By embracing sound fiscal practices, one can effectively manage their money, avoid bankruptcies or consumer proposals, and ultimately earn a more favourable financial life. So take control of your financial situation today and with our help, begin your journey towards a more stable and prosperous financial future with our “How to Increase Credit Score: How To Improve Your Canadian Credit Score”.

how to increase credit score
how to increase credit score

Importance of improving credit score: Know how to increase credit score

In today’s world, a good credit score functions as the cornerstone for getting financial freedom. For people that have grappled with debt, insolvency, bankruptcy or consumer proposals, improving their credit rating may look like an overwhelming obstacle. Yet, with the specific devices and insights we are supplying to you, any person will be able to take control of their very own financial life heading in the direction of a brighter tomorrow.

This is exactly why we have created “How to Increase Credit Score: How To Improve Your Canadian Credit Score“. Our recommendations and our tried-and-tested techniques will move you toward a better credit score, eventually unlocking excellent loan and mortgage opportunities from Canadian lenders, and enabling you to accomplish your financial goals. Take control of your future and bid farewell to higher interest rates and declined credit applications by going through our “How to Increase Credit Score: How To Improve Your Canadian Credit Score” today.

Description of what a credit score is, how it is determined and then how to increase credit score

A person’s credit worthiness is represented by a numerical score known as the credit score. This score is derived from various financial information such as payment history, credit utilization rates, length of credit history, types of credit used, and new credit inquiries.

Credit scores range from 300 to 900, where a higher score is indicative of better credit history and financial stability. The credit report, maintained by Canada’s two credit reporting agencies, Equifax Canada and TransUnion Canada (Equifax/TransUnion), is the source of credit ratings and it is what the Canadian banks will look at.

how to increase credit score
how to increase credit score

Importance of knowing your credit score and how to increase credit score

Maintaining a good credit score is a key factor in today’s financial landscape, irrespective of whether you are a student, a young professional, a business owner or are retired. Knowing your credit score is important so that you can stay informed on what others think of your creditworthiness and financial standing. Sometimes adverse information may find its way into your credit report as an error. By knowing what your credit report says, you will be able to prove any errors that should be eliminated which produces a lower credit score than what you are entitled to. It is important to have any errors fixed to avoid any negative impact on any assessment of your creditworthiness.

A low credit score can lead to being denied for credit, higher interest rates, and unfavourable loan terms from Canadian lenders. It is essential to maintain a high credit score as it paves the way for obtaining the best possible deals on loans and credit card products from financial institutions at the most favourable rates. Therefore, it is crucial to keep a tab on the various financial factors that contribute to your credit score to ensure a sound financial standing.

That is why we developed our complimentary no-cost e-learning module, “How to Increase Credit Score: How To Improve Your Canadian Credit Score”. To teach you how to improve your credit score.

Knowing how to obtain your free credit report is the 1st step in how to increase credit score

Maintaining vigilance over your credit report is a prudent method for verifying the precision of your credit history and score, both of which serve as significant benchmarks of your monetary stability. Fortunately, procuring a complimentary credit report has become effortless. It is your lawful right to receive an annual free credit report from each of the two Canadian credit bureaus.

Submit a formal request for your credit report via their digital portal or through the Canadian postal service. When you get it, meticulously examine it to identify any inconsistencies or inaccuracies that may be impeding your creditworthiness.

If you find yourself struggling with debt, don’t despair. Our complimentary e-learning module, “How to Increase Credit Score: How To Improve Your Canadian Credit Score” can provide you with valuable insights and practical strategies to enhance your credit score and overcome financial setbacks. You can trust us to help you take control of your financial future today.

how to increase credit score
how to increase credit score

Common credit score issues that create lower credit scores: How to increase credit score

A low credit score can present significant obstacles, particularly when making significant purchases on credit or seeking loans. Although there are many parts contributing to an individual’s credit score, certain concerns are regularly associated with reduced scores.

A number of widespread credit score difficulties can bring about lower scores, such as:

  • Late payments: Not making your payments on time will have a major negative impact on your credit score, whether we are talking about credit cards, loans or lines of credit. Late payments reflect badly on your credit report and can significantly affect your overall score. Paying your debts on time, and not just your minimum payment, has a positive impact on your credit rating.
  • High credit utilization: A higher credit utilization rate will adversely impact your credit score. Financial institutions prioritize borrowers who exhibit responsible credit management practices; hence, maintaining a low credit utilization ratio (usually below 30%) is fundamental.
  • Errors on your credit bureau report: As already stated, inaccuracies on a credit report, ranging from erroneous personal details to accounts that are not legitimately attributable, can harm your credit rating. To safeguard against such potential pitfalls, it is imperative to maintain an annual review of your credit report and promptly challenge, with evidence, any inaccuracies that may be encountered.
  • Defaulting on a loan: Be it a mortgage or an automobile loan, defaulting will lead to a deterioration in your creditworthiness. Therefore, you have to make sure when you are approved for a loan that you can afford the monthly payments and meet all other repayment terms. This is of prime importance.
  • Applying for too much credit: Requesting too much credit can have negative effects on your credit rating. Potential lenders, and especially credit card companies, may interpret this as a sign of your nervousness over your financial hardship and a greater chance of you eventually defaulting on the loan. As such, you should exercise moderation when applying for credit. Moderation and realism is the key to maintaining a healthy credit profile.
  • Accounts in collection: Having accounts in collection leads to a decrease in your credit score. This is because you have now shown that you cannot handle credit responsibly. It is imperative that you promptly settle any outstanding amounts and work with the creditor or its appointed collection agency to eliminate that account from your credit report. If you don’t, there will be a negative impact on your creditworthiness.
  • “Hard credit check” versus “soft credit checks”: See the next section for this discussion.

By steering clear of these typical credit score complications, you can keep a good credit score and heighten the probability of obtaining credit approval in the foreseeable future.

“Hard hits” versus “soft hits”: Know how to increase credit score

The first issue is having too many hard inquiries on your credit report. These hard inquiries occur when lenders pull your credit report and do a credit score check as the first step in determining if you’re going to be approved for a loan or other credit product you applied for.

What are hard inquiries on your credit report?

When seeking new credit such as a loan, credit card or mortgage, hard inquiries are initiated on your credit report. A hard inquiry is a request for a copy of your credit report and it remains on your credit report for two years. However, it only affects your credit score for one year.

What are soft inquiries on your credit report?

A soft inquiry is an informational check of your credit that does not impact your credit score. Soft inquiries appear when you or an authorized user view your own credit report, or when a business checks your credit for pre-approved offers or account reviews.

Soft inquiries are also known as “soft pulls” because they do not impact your score, unlike hard inquiries which do.

how to increase credit score
how to increase credit score

13 tips on how to address these issues and how to increase credit score in Canada

We understand that managing finances can be challenging, especially when you are maxed out on your credit and can’t repay the debt. You may be feeling overwhelmed and unsure of what to do next, but don’t worry, we are here to help.

Developing sound credit practices is the cornerstone of financial literacy. Learning and regularly practicing such practices is crucial as it will improve your financial outlook. By timely payment of bills, responsible use of credit cards, and staying on top of what is in your credit report, you can improve your credit score and secure a path to financial triumph.

This, in turn, can enable you to establish a robust credit history, thereby qualifying you for lower interest rates on all credit products. Sticking with the sound tips indicated below, it will grant you access to more advantageous lending options that may not be easily available to the masses.

Developing sound credit practices means unfailing commitment, meticulous planning, and unwavering attention to detail. However, you will reap the benefits because these tips and activities will help you achieve your long-term financial goals and establish a solid foundation for your and your family’s financial future.

Here are our 13 tips on how to address these issues and how to increase credit score in Canada:

  1. Assessing your debt situation

    You have to start by truthfully analyzing your whole financial status to successfully manage your financial debt. This involves meticulously gathering all the information from charge card statements, and loan agreements, and identifying all other outstanding debts to calculate the total amount owed, the individual interest rates you are being charged by product, and all your monthly payments. Only by doing so, can you after that begin to create a realistic plan to pay off your financial debts in a timely and efficient way.

  2. Creating a budget plan

    Now that you have collected all of your debt information, it’s time to develop a household budget that includes all incomes as well as expenses. Ensure you include all of your fixed expenditures like rent or mortgage payments, utilities and vehicle loan payments. Then you need to list all of your variable costs like food and entertainment.

    Once you have a clear idea of your expenditures, compute your income on a monthly basis and subtract your expenses from it. This will show you where you need to cut down on expenses and/or take on a side gig to raise your income.

    Keep in mind that you cannot be spending more than you earn in any month. Ideally, you want to spend less each month than your monthly income, so that you can then have money to dedicate to paying down your debts and building up an emergency savings fund.

    Incidentally, do not neglect to include the income tax you need to pay on your income, broken down into a regular monthly cost. Include that amount as a monthly expense also.

  3. Contacting your creditors

    It’s crucial to reach out to your creditors promptly if you’re having trouble keeping up with your debt payments. You might find that they’re receptive to collaborating with you on a customized repayment scheme that meets your financial capabilities. By disregarding your debts, you’ll only exacerbate the problem, which could lead to late charges, sanctions, and a negative impact on your credit report.

    Please keep in mind that unless you have first done the two steps listed above, you will not have a good understanding of what kind of accommodation you need to ask each creditor for. If you go in well-prepared knowing all of your numbers, you will significantly increase your chances of success in these negotiations.

  4. Explore debt consolidation

    If you’re dealing with numerous debts, you could want to take into consideration debt loan consolidation. It’s a viable option where you can secure a single loan at a lower rate of interest than the weighted average interest rate from every one of your debts that you’re currently paying.

    You then use the funds from this new loan to fully pay off or otherwise settle all your other debts. As a result, you will then only have one debt to concentrate on, with a reduced month-to-month repayment. This will certainly assist you handle your debts successfully and reduce the amount of interest you’re paying. This also saves you cash that you can then put toward building up your emergency fund and savings.

  5. Reduce credit utilization

    Decreasing credit utilization is an essential part of increasing your credit score. Firstly, take stock of your existing credit usage, and attempt to pay off the balances on the highest-interest accounts first. Think about settling your debts with a debt consolidation loan or a zero-percent balance transfer credit card. You can enjoy a healthy financial future by reducing your credit card balances and limiting how many times you apply for credit within a year. Enhance your credit score by lowering your credit utilization ratio.

  6. Pay your bills on time

    Always paying your bills on time is key to maintaining your credit rating in good shape. A constant history of timely repayments will help you build a higher credit score and which improves the look of your credit report. It is critical to keep your bills paid on time to show a positive payment history and not have a damaging influence on your credit history.

  7. Use Your Credit Responsibly

    Avoid maxing out your charge cards and try to keep your credit utilization rate low as previously stated. It will help you keep a great credit rating or improve your existing one by showing lenders that you are a responsible borrower.

  8. Monitor Your Credit Report

    Maintaining an accurate credit report and safeguarding against identity theft are critical financial practices. You are legally entitled to get from the Canadian credit reporting bureaus a complimentary copy of your credit report annually.

    Thoroughly review it so that you can detect any fraudulent activities or errors that could result in severe damage to your credit rating. Hopefully, there are not, but you must remain alert and well-informed about your credit standing to ensure your financial well-being.

  9. Limit New Credit Applications

    It is important for you to remember that each credit application you make reduces your credit score. Therefore, you must be cautious and limit the number of credit applications you make. You should only try to get new credit when it is absolutely needed. This advice also goes for applying for a credit limit increase of an existing credit product.

  10. Developing a Strong Credit Profile

    Having no or very little credit history can pose a huge problem when you make a credit application. Your credit file does not have enough information in it to show that you can handle credit responsibly. It is recommended to begin developing a positive credit history early on in your adult life. You should consider alternatives such as getting a secured credit card account or a 1-year term personal loan that requires you to make regular monthly payments. If you make your payments on time, you will begin establishing an excellent credit track record which brings about a good credit score.

    A word of caution. As you are just starting out, make sure that you only set reasonable loan or credit card limits so that you can afford the monthly payments to repay what you owe on the credit accounts during the period of time allowed by the lender.

  11. Explore professional credit counselling

    Individuals grappling with financial challenges may find it advantageous to seek the expertise of a seasoned credit counsellor. This prudent move can afford them a series of invaluable benefits, all of which serve to bolster their financial literacy and improve their overall monetary management. Prominent advantages of credit counselling include, but are not limited to:

    • Enhanced Debt Management: Credit counselling can help individuals struggling with debt to manage their finances better. The counsellors can offer valuable advice on debt repayment strategies, budgeting, and managing the debt load effectively.
    • Financial literacy: The acquisition of financial knowledge is essential for individuals to navigate the complexities of financial management with success. To this end, credit counsellors offer an imperative service by imparting essential financial education that equips individuals with the necessary skills to cultivate sound financial habits, make informed financial decisions, and preemptively avoid potential financial obstacles.
    • Improved credit score: Credit counselling services can provide individuals with the valuable expertise necessary to improve their credit scores. People who go through credit counselling obtain the tools necessary to practice the habit of responsible financial management which over time improves their credit scores.
    • Emotional Support: The credit counsellor can help people through the rough patches of anxiety and worry about their financial situation until they start feeling better about themselves and their improving financial situation.
  12. Speak to a licensed insolvency trustee

    There are benefits to having a no-cost consultation with a Canadian licensed insolvency trustee if you are facing financial difficulty. Here are a few:

      • Expert advice
      • Protection from creditors
      • Debt relief
      • Guidance through the process
      • Financial education

    Overall, speaking with a Canadian licensed insolvency trustee can help you take control of your finances and achieve a fresh start.

  13. Watch the video at the top of this Brandon’s Blog

You will find out how to access our no-cost e-learning module, “How to Increase Credit Score: How To Improve Your Canadian Credit Score”.

Conclusion: How to increase credit score

Managing your debts can be challenging, but with the right plan in place, it’s possible to get back on track. Remember to assess your debt situation, create a budget plan, contact your creditors, explore debt consolidation, and consider bankruptcy only as a last resort option. With these steps, you can take control of your finances and work towards a debt-free future. Having a maxed-out credit can be stressful and overwhelming. However, it is also an opportunity to take control of your finances and work towards improving your credit score.

With our complimentary no-cost e-learning module, “How to Increase Credit Score: How To Improve Your Canadian Credit Score”, you can learn practical strategies and expert advice on how to boost your credit score and secure better financial opportunities. By following our simple steps, you can finally put an end to being denied credit or paying high-interest rates. With dedication and perseverance, you can unlock financial freedom and achieve your goals. So, don’t wait any longer; start your journey towards a healthier credit score today and join countless individuals who have already benefited from our guide.

I hope you enjoyed this how to increase credit score Brandon’s Blog.

Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns are obviously on your mind. Coming out of the pandemic, we are also now worried about the economic effects of inflation and a potential recession.

The Ira Smith Team understands these concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy proceedings. We can get you debt relief now.

We have helped many entrepreneurs and their insolvent companies who thought that consulting with a trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

CLICK THE PICTURE BELOW TO GET OUR COMPLIMENTARY NO-COST E-LEARNING MODULE, “HOW TO INCREASE CREDIT SCORE: HOW TO IMPROVE YOUR CANADIAN CREDIT SCORE”

how to increase credit score
how to increase credit score
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CANADIAN CREDIT CARD DEBT: A COMPREHENSIVE GUIDE TO UNDERSTANDING AND TO GET OUT OF THE MENACING PROBLEM

Canadian credit card debt: Introduction

Due to the holiday buying season, December has traditionally been connected with a surge in Canadian credit card debt. Nonetheless, with the start of the COVID-19 pandemic in 2020 and the surge in case numbers, celebrations, travelling, and in-store holiday shopping pretty well stopped, resulting in an extraordinary reduction in Canadian credit card debt.

Fast forward 2 years to December 2022, and Canadian consumers have returned to their traditional pre-pandemic period of extravagance in holiday purchasing. With the pandemic’s hold loosening, Canadians have eagerly ushered in the holiday spirit, leading to a rebirth of the fad of maxing out credit cards. As a result of that, and other factors I will discuss below, Canadian credit card debt is once again growing.

The escalating issue of credit card debt in Canada is gradually becoming a matter of concern for individuals and the nation’s economy in general. In this Brandon’s Blog, I will delve deeper into the Canadian credit card debt predicament, the reasons behind its growth, and plausible solutions to tackle it.

Canadian credit card debt: What is it and why could it be a problem?

The outstanding balance of credit cards of Canadians at any specific point in time is what is described as Canadian credit card debt. It is built up when people utilize their credit card to make purchases, and afterwards, carry a credit card balance from one month to the next, rather than paying off the balance in full when due.

As this financial debt begins to grow, it can trigger a lot of stress and anxiety and make it hard to stay up to date with monthly expenses. Credit cards are well-known for having high-interest rates, which means that the longer a balance is carried, the more interest the borrower will be paying, making it even more difficult to pay down the amount owed.

Furthermore, excessive credit card debt can significantly harm a person’s credit rating, which can make it harder for them to get new loans or credit in the future. This can bring about missed payments or even default, both of which will, even more, harm their credit score.

If you don’t handle your Canadian credit card debt properly, it can lead to some serious financial problems.Canaacanadian credit card debt

The current state of Canadian credit card debt

According to recent reports by Statistics Canada and Equifax Canada, people’s credit card balances are on the rise. And it’s not just a one-time thing either – Equifax Canada’s report and the government statistical agency report both states that it has been going on for the past year. Actually, by the end of 2022, Canadian credit card debt had risen by 13.8% contrasted to the previous year, leading to an overall outstanding debt of $93.4 billion.

What’s specifically concerning is that this rise in credit card debt is striking lower-income households the hardest. With high inflation, lots of people in this group are turning to high-interest credit cards to cover important rising costs like food prices, medication, as well as rent. It’s clear that we need to do even more to sustain these Canadians and also help them resolve this problem of inflation causing extra costs for Canadians.

Credit card debt can be worrisome in Canada for a few reasons. One of them is that credit card companies tend to charge pretty high-interest rates here – around 20% or more! That’s quite a bit more than other kinds of debt you might have, like a car loan or a mortgage.

Another thing to keep in mind is that Canadians’ savings are low, due to many of the same reasons that Canadian credit card debt is rising – the main one being inflation. So if something unexpected happens, like a drop in income or an unexpected expense, some folks might not have much in the way of savings to fall back on.

All in all, it’s important to keep an eye on your credit card debt in Canada – it can pile up pretty quickly!

Canadian credit card debt: Why do Canadians have so much credit card debt?

Numerous factors contribute to the excessive credit card balances among Canadians. Among the primary reasons is the effortless accessibility of credit cards. Credit card companies aggressively market their products to Canadians, luring them with attractive incentives like sign-up bonuses, cashback rewards, and low introductory interest rates.

Canada’s high cost of living is another significant reason for the country’s high credit card debt. Canadians encounter steep housing costs, surging food and gas prices, and escalating expenses of every type and description. With income failing to keep up with expenses, many resort to credit cards to bridge the gap, leading to elevated debt.

When faced with unexpected expenses like vehicle repairs or other emergencies, many Canadians lack the necessary savings and turn to credit cards to bear the costs, further increasing their reliance on credit.

Finally, a considerable number of Canadians lack the financial literacy to fully understand the trap they are falling into by continuing their credit card usage with no hope of ever repaying the balance owed.canadian credit card debt

Canadian credit card debt: Common mistakes people make when it comes to credit card debt in Canada

Signing up for too many credit cards: This can make it challenging to stay on top of monthly payments and may even lead to overspending.

Neglecting to regularly review credit card statements: This can result in harmful errors or unchecked fraudulent charges, which can add up and cause undue stress.

Making large purchases: Using credit cards for a major expensive purchase without having a clear plan to pay off the balance, can lead to hefty interest charges and long-term debt.

Applying for too many credit cards: Often enticed by sign-up bonuses or rewards, too many credit cards can lead to an inability to monitor payment schedules and overspending.

Failure to regularly review credit card statements: This can result in undetected errors or fraudulent charges. This may ultimately result in an increased balance owed or avoidable fees.

Financing large purchases: Buying major expensive items such as automobiles or vacations using a credit card without a clear plan for repayment can lead to high-interest charges and long-term debt.

It’s essential to be mindful of these pitfalls and take steps to avoid them to stay financially healthy.

Canadian credit card debt: How to tackle credit card debt in Canada

The following are 7 practical tips and strategies that Canadian individuals grappling with credit card debt can utilize:

  1. Establish a budget: The primary step towards addressing Canadian credit card debt is establishing a budget. This will let you understand your revenue and expenses while identifying areas where you can decrease expenses to free up finances for debt repayment. It’s essential to factor in all bills, taxes, expenditures, and debt payments while drafting your budget.
  2. Prioritize debt repayment: After developing a budget, prioritize debt repayment. Begin by repaying high-interest debt, such as credit card debt, and make minimum payments on other debts.
  3. Consolidate debts: Consider consolidating credit card debt into a single loan that charges a lower interest rate. This simplifies debt management and lowers the interest paid over time.
  4. Seek expert assistance: If faced with challenges managing your debt, consider seeking expert assistance. This could involve partnering with a community non-profit credit counselling agency or a licensed insolvency trustee.
  5. Reducing expenses: Scrutinize your expenditure and identify areas where you can cut back, such as dining out, grocery shopping, and utility bills. Every penny saved can contribute towards debt repayment.
  6. Increase your income: This could include freelancing, part-time work, or selling unused items. These avenues could provide the additional funds necessary to accelerate your debt repayment.
  7. Avoiding unnecessary expenses: Using cash or debit cards as the form of payment instead of credit cards makes you think twice about every purchase before you make it.

Learning and using sound financial habits is fundamental for avoiding future credit card debt. Here are several compelling reasons why:

It creates superior financial management skills: The adoption of good financial habits, such as meticulous budgeting, diligent tracking of expenses, and prudent saving for unexpected contingencies, equips one with enhanced financial management skills. When one is always aware of their financial standing, they are less prone to impulsive expenditures, and the possibility of succumbing to credit card debt is thereby minimized.

It engenders a robust credit history: Good financial habits, such as paying your bills by their due date in full are what establish a good credit score. This augments the likelihood of future credit approvals and can result in more favourable interest rates and terms.

It eliminates tension and apprehension: Debt can be a source of profound stress, causing anxiety and other psychological distress. The development of good financial habits, together with the avoidance of credit card debt, can eliminate such concerns,canadian credit card debt

Canadian credit card debt: Conclusion

To conclude, by implementing these measures, you can take charge of your credit card debt and gradually work towards becoming debt-free.

I hope you enjoyed this Canadian credit card debt Brandon’s Blog. Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns are obviously on your mind. Coming out of the pandemic, we are also now worried about the economic effects of inflation and a potential recession.

The Ira Smith Team understands these concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now.

We have helped many entrepreneurs and their insolvent companies who thought that consulting with a trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.canadian credit card debt

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Brandon Blog Post

MORTGAGE FRAUD IN CANADA: CANADIAN BANKRUPTCY CAN’T RELEASE YOU FROM A CORRUPT DEBT YOU CREATED

Mortgage fraud: What everyone needs to know

There are 2 kinds of mortgage fraud. One is usually associated with identity theft. Someone steals your identity and has enough of your personal information to make a mortgage loan application and get approved for a mortgage loan registered against your property.

They take the money and don’t make any mortgage payments. The mortgage quickly goes into default and an innocent person is left with a mortgage they never applied for registered against their home and in default. This is a serious problem, but, not the one I am writing about in this mortgage fraud Brandon’s Blog.

As you can see, both an innocent person and a lender can become a victim of mortgage fraud. In this Brandon’s blog post, I will describe it a bit more and tell you about a recent decision of the Court of Appeal for Ontario about a civil mortgage fraud case.

Through this case discussion, you will learn why someone who is caught perpetrating a fraud scam cannot use the Canadian bankruptcy system to get out of the debt. Rather, that debt will follow them for life.

Mortgage fraud: Seriously though, one in five?

The Financial Services Commission of Ontario advises everyone to be vigilant against mortgage fraud. They state that it usually occurs when people falsify, misrepresent, or exaggerate information on their mortgage applications in order to obtain financing that they would not otherwise be eligible for.

It can be the person’s own idea and action or, they could have filled out their application truthfully and then were coached by one or more mortgage brokers or real estate professionals. They are told that without modifying the application they will not be approved for the mortgage and will not be able to buy a home.

A study by Equifax Canada found that suspected fraudulent mortgage applications have increased by 52 percent in Canada since 2013, with Ontario seeing the majority. The rising cost of homes has made it difficult for many people to afford one, which has led some to resort to fraudulent means in order to get the necessary mortgage funding.

According to a 2017 study from Equifax Canada, 13% of Canadians believe that telling a little white lie is perfectly acceptable if it means getting the house they want. Equifax Canada also reported that in 2019, 23 percent of millennials said it was totally acceptable to lie about their annual income when applying for a mortgage. I wonder what the percentage of people looking to score their dream home and are not afraid of bending the truth a little would be today?

As interest rates go up and borrowing rules get stricter, it becomes harder for people to achieve their homeownership goals. It’s estimated that 20% of all mortgage applicants engage in some form of mortgage fraud.mortgage fraud

What are the most common schemes that can be classified as mortgage fraud?

One person’s little white lie that might not seem like a big deal to them, could be another person’s idea of a mortgage fraud scam. It all comes down to everyone’s honesty and conscience. When looking at residential mortgage fraud, which is a serious issue, there are generally three main schemes.

In Canada, do lenders check for owner occupancy?

Not really. Owner occupancy may not be as it seems. It is easier to get a mortgage approved for an owner-occupied home than for a rental investment property. Owner occupancy fraud is a common scheme.

Forging owner occupancy is pretty easy for a home buyer. All they need to do is tick the “yes box” when asked on the application if the home will be owner-occupied. The person will also need to be OK with swearing a false affidavit that the home will be owner-occupied. After that, the person should be good to go.

Once the loan is made and the real estate transaction is complete, there’s no need to worry about anyone checking up on the borrower or the property. There’s no need to try and create the illusion of owner occupancy. Foreign buyers have been known to either hire the services of a person or use a relative resident in Canada to act as a straw buyer.

Shady mortgage brokers or crooked mortgage agents

Falsified documents for employment and income are often fabricated by mortgage brokers/agents in a way that will pass the approval process of certain private lenders or certain institutional mortgage lenders.

You probably remember that in 2015, Home Capital Group stopped using 45 brokers because their business activities were found out that those brokers had engaged in fraudulent activities committing $2 billion worth of mortgage fraud using these techniques.

Debt shell game

People with too much debt may not be able to qualify for a mortgage because of those debts. They take out a loan from family or friends and pay off those debts. The new debts replacing the old ones don’t show up on a credit search or anywhere else. They don’t include those new loans on their mortgage application. This causes their financial ratios to look much better than the reality. They look good enough to qualify for that mortgage loan.

The problem of course with this kind of mortgage fraud is that a person who rearranges their debt like this and completes a false mortgage application may not be able to keep up with their mortgage payments as they will also be under pressure to repay their friends and family first. The eventual mortgage default may not be a problem for the lender in a rising real estate market, but that kind of market is not always the case.

This mortgage fraud case may be of interest to you

This court case about civil mortgage fraud you are really going to like. The Court of Appeal for Ontario released its decision on July 28, 2022. The defendants appealed the decision of the motion judge. I was astonished to see the lengths these defendants went to, which the court determined constituted a consumer mortgage fraud scheme not released by a discharge from bankruptcy.

It is the fascinating case of M.O.S. MortgageOne Solutions Ltd. v. Heidary, 2022 ONCA 561 (CanLII). The mortgagee originally provided funds to the mortgagor which were secured by a third mortgage that was ranked behind the first mortgage held by Manulife Financial. There were also various Minister of National Revenue (MNR) liens that were registered on the title against the property.

The mortgagor asked the mortgagee to provide additional funds to him to help with the payment and consolidation of his debts. The parties agreed that the mortgagor would use the funds to pay off the MNR liens so that the mortgage would now become a second mortgage.mortgage fraud

The income tax arrears real estate fraud

The mortgagor directed the mortgagee’s representative to an individual, “Dave Erwin”, whom he represented as his Canada Revenue Agency (“CRA”) collection officer. This referral came as a result of the mortgagee’s need to independently confirm the amount of the MNR liens and arrange for payment, before making any advances.

After speaking with “Dave Erwin”, the mortgagee advanced the amount of $296,418.73 to the MNR. However, after the respondent advanced these funds, it was discovered that the so-called “CRA agent” was an imposter. The amount still owing and needed to discharge all the MNR liens was an additional amount of outstanding liens totalling $316,566.36. Consequently, the respondent’s mortgage remained in 3rd place.

It seems to me that the mortgagor was only able to commit this type of mortgage fraud because the mortgagee didn’t do their due diligence properly. Maybe they were just too eager to jump from third to second place. I don’t know, because I’m not involved in this matter.

Why wasn’t this mortgage fraud detected?

This mortgage fraud was not detected because the mortgagee was satisfied to rely on the confirmation supplied by “Dave Erwin”, including certain false documentation that did not reach the level of proper due diligence. How could it have been detected before advancing funds? Very simple. The mortgagee should have asked to see the original copy of the collection letters from CRA. That would have shown them the proper amount owing and the name and number of the real collections officer.

Alternatively, a simple search of the real property title would have uncovered the liens and their total amount. I am also not sure how you negotiate a priority agreement without the real amount owing ever having been discussed. Regardless, it happened.

There was still the additional amount ranking ahead of the mortgagee, and they were not in the position they thought they bargained for. From the mortgagor’s perspective, he bought some time with CRA since they received a significant paydown. He just traded one debt for another, but he obviously must have felt that owing CRA less and the mortgagee more was worth it.mortgage fraud

The court case involving the detection of mortgage fraud

The mortgagee issued a statement of claim against the mortgagor, seeking various elements of relief including possession of the property due to the default under the priority agreement. The mortgagee also sought a declaration that any judgment against their borrower will survive any subsequent assignment in bankruptcy which will not be released by his bankruptcy discharge.

The mortgagor served a notice of intent to defend but never filed a statement of defence because the parties ultimately agreed to a consent judgment. Both parties were represented by counsel. The October 10, 2018 judgment required the mortgagor to pay $784,250 to the mortgagee. It did not have any wording that the claim would survive a discharge from bankruptcy.

The mortgagor then filed an assignment into bankruptcy and any enforcement by the mortgagee under the judgment automatically stayed under the provisions of the Bankruptcy and Insolvency Act (Canada) (BIA). The mortgagee brought a motion seeking a declaration that the debt to the consent judgment survived the bankruptcy and the stay proceedings were no longer effective with regard to the judgment. The motion judge, who had also granted the consent judgment, found that the pleadings raised the issue of fraud and granted that motion.

The bankrupt appealed this finding.

Why is section 178(1) of the BIA so important?

In the next section, you’ll see how section 178(1) of the BIA becomes so important. I’ve written about this section of the BIA many times before. In the simplest of terms, this is the section of the BIA that outlines the kinds of debts that aren’t discharged when the person gets his or her discharge from bankruptcy.

Any outstanding debt included in this section will remain with the debtor indefinitely. The only debts that will be discharged are those that are not included in this section of the BIA.

In the next section, you will see that sections 178(1)(d) and (e) are being argued over. You should know that a bankruptcy discharge does not extinguish certain debts, such as:

  • Any debt or liability as a result of fraud, embezzlement, misappropriation, or defalcation while acting in a fiduciary capacity (178(1)(d)).
  • If you obtain property or services by means of false pretenses or fraudulent misrepresentation, that incur debt or liability, other than one that arises from an equity claim (178(1)(e)).mortgage fraud

What happens if you commit this kind of mortgage fraud and then go bankrupt, according to the Court of Appeal for Ontario?

In his appeal, the bankrupt submitted that the motion judge erred in declaring that the mortgagee’s judgment debt was not released pursuant to s. 178(1)(e) of the BIA. The mortgagee had only pleaded relief under s. 178(1)(d) of the BIA and it was unfair to him to grant relief not contained in the statement of claim.

Additionally, the bankrupt contended that the motion judge was incorrect in concluding that he had admitted to fraud by consenting to judgment, as the judgment itself made no mention of fraud or that the judgment would remain valid after he was discharged from bankruptcy.

The bankrupt maintained that, unless fraud was pleaded, it could not support a finding that a debt was not released by the debtor’s bankruptcy under s. 178(1) of the BIA. In any event, the bankrupt argued that fraud is not a reasonable inference arising from the pleadings.

The appellate court ruled against the bankrupt. The three-justice panel decided that the motion judge did not make any errors in providing relief under s. 178( 1 )(e) of the BIA. The decision was consistent with the pleadings and consent judgment. There was no unfairness to the bankrupt.

In order to obtain a declaration that a judgment survives a bankrupt’s discharge under s. 178(1) of the BIA, the claimant does not need to specifically refer to s. 178 in the pleadings on which the judgment is based. They relied on a 2018 decision of the Court of Appeal for Ontario to make this finding.

The bankrupt’s mortgage fraud and bankruptcy scheme was an abysmal failure. He was dealt a heavy blow.

What are the consequences of mortgage fraud debt in Canadian bankruptcy?

As outlined above, any debt falling under section 178(1) of the BIA will not be released when the bankrupt gets his or her discharge. The debt arising from mortgage fraud will follow the debtor for life.

This fraudulent activity is also a criminal offence. If you are being tempted or persuaded to commit mortgage fraud, you should get proper legal advice from a legal professional before making any decisions.

I hope you enjoyed this Brandon’s Blog. Are you in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring.

However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt. You are worried because you are facing significant financial challenges.

It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. We know that we can help you the way we take the load off of your shoulders and devise a debt settlement plan.

We realize that people and businesses in financial difficulty need practical advice and a workable solution in an easy-to-understand financial plan. The Ira Smith Team knows that not everyone has to file for bankruptcy in Canada. Most of our clients never do, as we are familiar with alternatives to bankruptcy. We assist many people in finding the relief they need.

Call or email us. We can tailor a new debt restructuring procedure specifically for you, based on your unique economic situation and needs. If any of this sounds familiar to you and you’re serious about finding a solution, let us know.

Call us now for a no-cost initial consultation.mortgage fraud

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CANADIAN DEBTORS ASSOCIATION URGES ESSENTIAL CHANGES TO BANKRUPTCY AND INSOLVENCY ACT

As the COVID-19 pandemic continues,ce hope that you, your family, and your friends are safe, healthy, and secure. Ira Smith Trustee & Receiver Inc. is fully operational, and both Ira and Brandon Smith are readily available for phone or video consultations.

The Canadian Debtors Association was formed to fix this problem

Many people have faced a difficult time in their life and experienced many problems as a result. We all know that the human spirit can be tested, and it can be tested hard, whether they have lost their jobs, suffered serious injuries, or just needed to trim their spending. Financial hardships can lead to feelings of hopelessness, depression, and anxiety.

A national non-profit organization serving Canadians with debt problems is the Canadian Debtors Association. It was established a few years ago. They advocate exclusively on behalf of debtors who face economic hardship and insurmountable debt. Their belief is that debtors need someone they can call their own, someone who is willing to help them resolve their debt problems and support them unconditionally. A future where Debtors have the support of their own advocates is seen by the Canadian Debtors Association, which has created a Debtor Bill of Rights as a framework for the protocols that Debtors should be entitled to.

In this Brandon Blog, I describe the problem that the Canadian Debtors Association has identified and their preferred method of fixing it. I also provide my comments on their plan.

Canadian Debtors Association motto: Join us as we build a better Debtor experience

The mission of the Canadian Debtors Association is to reduce the number of financially vulnerable Canadians facing a financial crisis and overwhelming debt loads. This is a very good thing. Canadian Debtors Association has identified a real problem in credit reporting. That problem is that the Canadian credit reporting agencies do not really differentiate on someone’s credit report between them completing a successful consumer proposal or Division I Proposal and avoiding bankruptcy, and those who file an assignment in bankruptcy. It is true that those who avoid bankruptcy should be able to clear their record than someone who went into bankruptcy.

Thousands of Canadians file for bankruptcy or submit a consumer proposal to manage their debts every year. Over one million Canadians used the insolvency system from 2012 to July 2021. Regarding the accurate recording and reporting of bankruptcy and consumer proposal information on consumer credit reports, there are no specific references, standards, accountability, or provisions for insolvency reporting through Canadian credit bureaus.

Ms. Henrietta Ross, President, and CEO of the Canadian Debtors Association released through the CNW Group a statement asking all stakeholders in the credit, debt, and insolvency industries to work together on modernizing Canada’s Bankruptcy and Insolvency Act (BIA) in order to assist Canadians facing financial hardship.

canadian debtors association
canadian debtors association

Canadian Debtors Association agrees that everyone deserves a fresh start

The insolvency law and policy in Canada are based on the principle of providing a “fresh start” for people who are drowning in insurmountable debt and who suffer a financial breakdown. Legislators, stakeholder groups, academics, and insolvency experts all accept this principle. Debtors seek relief from existing debt in order to regain control of their finances.

The BIA intends to implement a fresh start, but debtors experience problems because, after undergoing a BIA debt relief solution, they encounter problems from the debt industry due to inaccurate insolvency-reporting information on their credit reports. By sabotaging the fresh start Canadians deserve and expect, inaccurate reporting undermines the very fundamental tenets of the Bankruptcy and Insolvency Act. The Canadian Debtors Association proposes that this dilemma can be resolved by amending federal legislation that stipulates the appropriate representation of insolvency-related information on consumer credit reports.

The use of consumer credit has had explosive growth over the past several years, so the utilization of credit reports and personal credit histories has also seen a massive expansion. Canadians’ daily lives are impacted by these monumental changes in the number and use of credit reports.

The responsibility for this information’s integrity and accuracy is not explicit. There is no regulated authority in credit reporting under the BIA. The Office of the Superintendent of Bankruptcy (OSB) oversees the administration of the insolvency system, including maintaining public records and statistics; however, the OSB does not specify how BIA debt relief options of bankruptcy and consumer proposals should be described or interpreted on credit reports. It simply is not their job!

Canadian Debtors Association explain this problem

A person who finds themselves facing economic hardship and in financial difficulty is allowed to use a BIA-subscribed debt relief solution to eliminate their debts through the fresh start process. When filing either for bankruptcy or a proposal is entitled to a stay of proceedings, which prevents creditors from initiating or continuing legal action against the debtor.

Providing inaccurate and misleading information for credit reports, sometimes through simple mistakes and sometimes because there are no differentiation codes for credit reports. So creditors doing a credit search may mistakenly believe that some debts remain delinquent and unaddressed. This undermines the legal stay. The Canadian Debtors Association feels this causes debtors who are otherwise discharged from their past debts, to continue to suffer within the Canadian credit system which is therefore not a total “fresh start”.

Canadians can also suffer the consequences of inaccurate insolvency information on their credit reports. The misapplication of delinquency ratings, the incorrect labeling of bankruptcy, and the mingling of insolvency terms constitute layers of misinformation that are misleading. Often, even third-party companies that obtain credit reports from a major credit bureau, such as TransUnion, erroneously list “bankruptcy” on reports of debtors who never declared bankruptcy.

The consumer is hurt badly and unnecessary suffering is caused, such as the loss of employment opportunities, refusal of a lease from a landlord, increase in costs Rejection of employment opportunities, refusal of a lease from a landlord, increase in costs services such as attempts by debtors to correct their credit reports are in vain. This unintended negative impact is not the debtor experience envisioned by the BIA. Such negative impact does not lead to a better quality of life for those relieved of their financial burden.

canadian debtors association
canadian debtors association

Canadian Debtors Association urges changes to Bankruptcy and Insolvency Act

Consumer credit reports wield enormous power, with significant implications for an individual’s livelihood and well-being, so accuracy is extremely important. It is also imperative to have accurate information since a bankruptcy or consumer proposal is a closely scrutinized part of a consumer’s credit history.

To solve this problem and the negative impact on Canadians otherwise freed from their past financial hardship, the Canadian Debtors Association says that the BIA must be updated to help Canadians have correct representation in credit reports. The BIA is the key piece of Canada’s debtor and creditor balanced legislative framework. It is the only personal insolvency legislation in Canada that provides a fresh start for those in debt. We must ensure its continued effectiveness by making it easier to use and by modernizing it to reflect current credit reporting realities.

Canadian Debtors Association has identified a real problem but the wrong solution IMO

Most provinces in Canada have enacted laws that outline the practices that credit reporting agencies and users of consumer credit information must follow in order to protect consumers’ rights. Federal regulations do not govern credit reporting agencies but provincial laws do. Canada’s insolvency legislation and the Canadian insolvency system are under the control of the federal government. So in my opinion, it would be unwise to try to fix a problem that falls under provincial jurisdiction with federal law.

Second, it is very difficult to pass a Member’s Bill to amend federal legislation through the House of Commons and the Senate. There is always a focus on matters of extreme federal importance or those that will win votes, rightly or wrongly. My view is that people having their insolvency process mislabeled, and therefore taking longer than they should to regain and take on additional credit, does not fit into the category of national significance or vote-getting.

Canadian Debtors Association states they are debtor industry advocate professionals and have honed their skills of debtor advocate work. They should take a more direct approach, in my opinion. Talk to the Canadian credit bureaus directly. In Canada, there are only two credit reporting agencies – Equifax Canada and TransUnion Canada.

Team up with insolvency industry players, such as the national association representing licensed insolvency trustees in Canada, the Canadian Association of Insolvency and Restructuring Professionals. Together, they can advocate directly on behalf of debtors with the credit reporting agencies to make that aspect of consumer credit reports more accurate and meaningful. If their advocacy is not heard, then lobby the provincial governments to enact further legislation, as it is their responsibility to do so.

That would seem a much better solution.

canadian debtors association
canadian debtors association

Canadian Debtors Association summary

The Canadian Debtors Association is calling on the federal government to modernize the BIA to better serve Canadians in financial difficulty. However, their only issue is that provincially supervised credit reporting agencies are not differentiating between successfully completed proposals and bankruptcy. Above I have suggested what I believe is a much easier route for them to go in their advocacy to accomplish the same thing.

I hope you found this Canadian Debtors Association Brandon Blog informative. Although nothing is guaranteed, managing your debt in a way that will allow you or your company to be able to afford it, will lead to your financial success. It will also give you the best shot at having a financially stress-free life.

Are you or your company in financial distress and a debt crisis? Are you embroiled in costly litigation or a crushing debt load and need a time out in order to restructure? Do you not have adequate funds to pay your financial obligations as they come due? Are you worried about what will happen to you? Do you need to search out what your debt relief options and realistic debt relief solutions for your family debt are? Is your company in financial hot water?

Call the Ira Smith Team today. We have decades and generations of experience assisting people looking for life-changing debt solutions through a debt settlement plan and AVOID the bankruptcy process.

As licensed insolvency professionals, we are the only people accredited, acknowledged and supervised by the federal government to provide insolvency advice and to implement approaches to help you remain out of personal bankruptcy while eliminating your debts. A consumer proposal is a Government of Canada-approved debt settlement plan to do that. It is an alternative to bankruptcy. We will help you decide on what is best for you between a consumer proposal vs bankruptcy.

Call the Ira Smith Team today so you can eliminate the stress, anxiety, and pain from your life that your financial problems have caused. With the one-of-a-kind roadmap, we develop just for you, we will immediately return you right into a healthy balanced problem-free life.

You can have a no-cost analysis so we can help you fix your troubles.

Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

canadian debtors association
canadian debtors association

As the COVID-19 pandemic continues, we hope that you, your family, and your friends are safe, healthy, and secure. Ira Smith Trustee & Receiver Inc. is fully operational, and both Ira and Brandon Smith are readily available for phone or video consultations.

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LOWEST CREDIT SCORES RATING: THESE CANAD1ANS LED GIGANTIC CREDIT CARD DEBT REPAYMENT

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Canadians with the lowest credit scores rating led a wave of pandemic credit card debt repayment

Statistics Canada reported on August 23, 2021, that Canadians with the lowest credit scores rating repaid the most credit card debt in the first year of the pandemic. Over the period of the pandemic to January 2021, the mortgage debt of Canadian households increased by a record amount of $99.6 billion, driven by rising home prices, especially for single-family houses. Over the same period, non-mortgage debt fell by a record $20.6 billion, mainly due to a $16.6 billion decline in credit card debt.

In this Brandon Blog, I look at the area of people with credit scores rating and discuss how and why these lowest credit scores rating Canadians were able to pay down their high-interest debt.

Credit scores rating: Credit report and score basics

Credit scores are three-digit numbers derived from your credit report. An individual’s credit report summarizes their Canadian credit history. The Canadian credit reporting bureaus are Equifax Canada and TransUnion Canada. These private companies are credit reporting agencies that collect, store, and share information about how you use credit. As your credit report changes over time, your credit score will change as well. The more responsibly you manage your credit, the more points you get. According to a review of Borrowell Canada members, even a single missed payment can lower credit scores by 150 points.

Your credit score calculation is based on information in your credit report. A credit score between 660 and 900 is generally considered good, very good, or excellent credit scores.

The credit score model has credit score ranges from 300 to 900 that is used to determine creditworthiness. People always ask if there is a “magic number” to obtain better loan rates. This is an age-old question. Different lenders may focus on different aspects of your credit history. So, I cannot give you one number that unlocks the door to the best loan rates.

credit scores rating
credit scores rating

Credit scores rating: How to check your credit report

Getting a credit card, getting a car loan, or applying for any loan will result in a credit file being opened up on you. The report keeps getting updated over time. Your borrowing history and borrowing experience are all taken into account.

The report contains information about every loan you have taken out in the last six years and whether you pay on time or not, how much you owe, what your credit limit is on each, as well as a list of creditors who are authorized to access your record.

You can get a free credit report on yourself yearly from each credit bureau. You need to submit your ID and background details to prove you are the person entitled to make the request. You can make sure that your credit history report is error-free. Any errors will be corrected by each credit bureau based on the evidence you provide.

A credit rating of R1 is the best. That means you pay within 30 days of receiving your bill, or “as agreed.”

Anyone who wants to grant you credit or provide you with a service that involves you receiving something before you pay for it (such as a rental apartment or phone service) can get a copy of your credit report so they can make a credit decision about you.

R9 is the lowest credit rating.

Average Canadian credit scores rating improved during the pandemic, Borrowell study finds

With Borrowell, a fintech company, you can get your credit score every week for free. From Q1 2020 to Q1 2021, they analyzed credit scores and credit reports of 1,015,369 Canadians, including those in 20 of Canada’s largest cities, to investigate changes in credit scores and missed payment trends across the country.

The Borrowell study came up with several very interesting findings:

  • Government relief measures, lifestyle changes, and financial shifts have impacted credit scores and bill payments over the past year – sometimes revealing the divergence in how COVID-19 affected different segments of society’s financial future.
  • In spite of the coronavirus pandemic, credit scores for Canadians actually improved.
  • The average number of people with missed payments decreased from 3 out of every 10 consumers to 2 out of every 10 people between the first quarter of 2020 and the first quarter of 2021.
  • From Q1 2020 to Q1 2021, Borrowell members’ average credit scores increased by 18 points, rising from 649 (under the average) in Q1 2020 to 667 (fair).
  • The risk of missing paying bills on time is 432 times higher for consumers with low credit scores rating.

    credit scores rating
    credit scores rating

The Statistics Canada study: Canadians with the lowest credit scores rating led the wave of pandemic credit card debt repayment

The new StatsCan study, “Trends in household non-mortgage loans: The evolution of Canadian household debt before and during COVID-19“, examines how Canadians reduced non-mortgage debt and debt levels during the pandemic.

During the pandemic, households began to see their disposable income rise, partly due to the limited spending opportunities during lockdowns, as well as the government’s monetary assistance, such as CERB or enhanced Employment Insurance. This was an opportunity for many households to pay down their expensive non-mortgage debt, with unsecured credit lines and credit card balances being paid down at record levels.

Prior to the pandemic, the outstanding balance on credit cards was $90.6 billion in February 2020, compared with $74 billion just a year later. During the two decades prior to the pandemic, the outstanding balance carried on credit cards had increased on average by 20.7% per year.

Debt reductions were greatest among Canadians with the lowest credit ratings, suggesting that those most vulnerable to financial hardship used savings prudently during the pandemic. Home prices increased, especially for single-family houses, as I indicated at the outset, driving a record increase in mortgage debt for Canadian households of $99.6 billion.

For me, this is a mixed blessing. You may be pleased to hear that many Canadians with low credit scores have been able to save money and reduce their household debt. In my opinion, mortgage debt is highly unlikely to have been accumulated by the same people.

People with low credit scores were not the ones filling out mortgage applications. It was rather people with good and excellent credit who either moved up and/or refinanced in order to do renovations, improvements and/or to pay off debt with a high-interest rate. Furthermore, it shows that people with low credit scores can earn more money staying home and receiving government COVID-19 assistance than they could make at their normal job. That is a very sad comment.

Minimum credit scores rating for mortgages in Canada

You can either be approved or declined for a mortgage based on your credit score. It can affect your mortgage interest rate, the type of mortgage available, as well as the mortgage lenders that you can choose from.

A mortgage requires a minimum credit score of:

  • in the case of major banks, 600;
  • for B lenders, 550;
  • private lenders have no minimum requirements; and
  • for CMHC mortgage default insurance mortgages, 600 points are required.

For a mortgage with bad credit, your only options are B lenders and private lenders, and they may require a large down payment or equity in your home. A lower credit score is generally associated with a higher mortgage interest rate. Low mortgage rates require a credit score of at least 680.

Having a credit score above 600 is good for getting a mortgage in Canada, as it opens up more options. In most cases, CMHC mortgage default insurance is not available to people with credit scores below 600. When you have a low credit score, your mortgage loan application may be denied, your mortgage rate may be higher, or you may be limited in the amount of money you can borrow.

A credit scores rating must be 680+ to qualify for the low-interest rates advertised in the media. CMHC mortgage default insurance is another issue some borrowers need to be concerned about. As long as you have sufficient income and property value to service the mortgage, a low score may suffice, however, the private lender will charge you higher fees and interest rates.

credit scores rating
credit scores rating

Credit scores rating summary

I hope that you found this credit scores rating Brandon Blog. Credit scores do not always properly reflect people who have problems because they are cash-starved and in debt. There are several insolvency processes available to a person or company with too much debt. You may not need to file for bankruptcy.

If you are concerned because you or your business are dealing with substantial debt challenges, you need debt help and you assume bankruptcy is your only option, call me.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties with debt relief options as an alternative to bankruptcy. We can get you the relief you need and so deserve. Our professional advice will create for you a personalized debt-free plan for you or your company during our no-cost initial consultation.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people with credit cards maxed out and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do as we know the alternatives to bankruptcy. We help many people and companies stay clear of filing an assignment in bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt-free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

credit scores rating
credit scores rating
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IS MORTGAGE DEBT NOW THE OBSESSION FOR MANY CANADIANS?

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Is mortgage debt surge responsible for pushing Canadian consumer debt levels higher?

For many people in Canada, a house is the centre of the family’s financial world. As a result, if the family’s financial situation changes, the house, and the mortgage that goes with it, become the focus of the family.

Is mortgage debt pressing consumer financial debt higher in Canada?

Equifax Canada recently reported that it is. One effect of the pandemic is that Canadian credit card usage and debt are dropping, as families borrow more cash right for their homes while spending less on everything else.

In this Brandon Blog, I offer some thoughts on why is mortgage debt rising, pushing total Canadian consumer debt above pre-pandemic levels, while credit card debts are falling during the COVID-19 pandemic.

Is mortgage debt surge pushing Canada consumer debt to $2.1 trillion?

Those in the real estate sector in Canada will certainly agree that the housing market is one of the greatest financial factors that influence the success of the Canadian economy. These days, the sector is exceptionally competitive which has a great influence on the housing market.

Competition among residential real estate buyers is fierce in many markets throughout the nation, especially British Columbia and Ontario. The pandemic has actually stimulated a record boom in Canada’s housing market. Low rates of interest, as well as brand-new demand for a larger home, have actually sustained bidding battles for houses.

What’s behind the record-breaking growth in the hot housing market in Canada? Is mortgage debt behind the increase in mortgage debt? Yes, according to Statistics Canada. It stated last Friday that Canadian families incurred a new high level of mortgage debt in the 2nd quarter in a row. Canadian households added record mortgage debt amid low interest, high prices.

Driving hot markets in many regions aided move real estate prices and the average sale price higher, pushing the need for home loans to $34.9 billion in the 4th quarter of 2020. This need beat the previous high of $28.7 billion in the 3rd quarter, Statistics Canada reported.

is mortgage debt
is mortgage debt

Is mortgage debt growth making Canada’s economy vulnerable? The central bank says yes

What is the Bank of Canada‘s worries? The Bank of Canada said that growing mortgage debt makes Canada’s economy vulnerable.

High household debt, as well as inequalities in the real estate market, have escalated in the past 12 months, leaving the economy more prone to economic shocks. The central bank said that although consumer debt had actually dropped in early 2020, a boost in housing debt has more than balanced out that decrease, with total household debt climbing sharply since mid-2020.

That is one reason why, effective June 1, 2021, the Office of the Superintendent of Financial Institutions (OSFI, Canada’s leading financial regulatory authority, elevated the home mortgage stress test level for mortgage applications through banks, insurance companies and credit unions. It does not yet apply to private mortgages.

The stress test was raised so that borrowers must now be able to meet the financial test to carry a mortgage at an annual interest rate of either 5.25 percent or 2 points over the actual mortgage market rate they can get, whichever is greater. This will certainly make it harder for some to get approved for a home mortgage. The government hopes this will lead to reducing the pool of accepted borrowers as well as eventually, lowering residence rates.

The June 1 adjustment implies potential mortgagors will certainly need to prove that their finances can stand paying at that greater interest rate, no matter what rate a lender is willing to lend at. OSFI hopes that this adjustment will reduce either the number of buyers or the amount a purchaser can afford to pay given the mortgage financing available to them. The hope is that it will stem the higher pressure on house prices in the country.

Is mortgage debt the only reason Canadian household debt is so high?

As you can see from the above, mortgage debt is up but credit card debt is down. in fact, it is at a 6 year low. So is mortgage debt the only reason total household debt is up? When I speak of mortgage debt, I am talking about conventional mortgage debt. The answer is no.

Equifax Canada also reports that other big-ticket credit products like credit lines have likewise represented a general increase in Canadian financial debt. She said there was a 60 percent rise in house equity credit lines! Like mortgage debt, this is a secured debt registered against the borrower’s home.

People are borrowing these additional home equity lines of credit. The worry is if rates of interest rise, individuals may not be able to pay the debt servicing costs and the debt payments for that financial obligation. Those kinds of loans are usually at a variable interest rate.

is mortgage debt
is mortgage debt

My take on why is mortgage debt and other household debt driving in these directions?

It wasn’t an interest rate boost that forced Canadians to get consumer spending in check – it took a pandemic for many of us to transform our spending practices. Stay-at-home orders, lockdowns, nowhere to go and fewer places to spend our money have all contributed to what we are now seeing. Couple that with many Canadians being able to work from home and Canada’s COVID-19 Economic Response Plan.

Consumer spending shifted away from credit card spending. My personal view is that people’s spending patterns shifted away from consumer goods that normally would be charged to credit cards. Perhaps some of the increase in home equity lines of credit was to consolidate debt by borrowing against their homes to pay down high rate credit card debt.

Also, people were hunkered down working, going to school and generally living 24/7 in their homes. We all got to see the points we love about our home and perhaps noticed for the first time, or at least were bothered for the first time, with little imperfections in our homes. That could lead to increased borrowing in order to do additions or renovations.

It also could lead to selling the existing home and buying a different one and moving. Maybe that drove more demand than there was supply, which caused home prices to continue rising. Increased pricing required increased mortgage application numbers, mortgage borrowing, the individual size of mortgages to increase and drove total mortgage growth. Perhaps FOMO also contributed to the increased demand.

This is merely conjecture on my part, but one thing is for sure. The pandemic could not stop house prices from rising, mortgage debt from increasing and credit card debt from reducing. Overall, household debt increased. The worry now is if interest rates rise, it will take a larger proportion of household income to meet debt servicing requirements. Hopefully, everyone’s household budget will be able to handle it.

Is mortgage debt now the focus for many Canadians?

Apparently so. I hope that you found this Is mortgage debt now the obsession for many Canadians Brandon Blog interesting. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve. Our professional advice will create for you a personalized debt-free plan for you or your company during our no-cost initial consultation.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt-free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

is mortgage debt
is mortgage debt
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CREDIT REPORT FROM EQUIFAX: HOW THIS ONTARIO TEACHER’S CREDIT SCORE TOOK AN AWFUL MASSIVE HIT TO ZERO

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Credit report from Equifax: What is the Equifax Credit Score?

A credit report from Equifax Canada Co. shows your recent credit history as well as the Equifax credit score. This credit score is the most widely recognized one in Canada. It is used to determine an individual’s creditworthiness and is used for a host of purposes, including the ability to get a mortgage or credit card. This score is commonly used as a predictive model for lending decisions.

Equifax Canada is one of two credit bureaus in Canada. The other one is TransUnion Canada. Each one uses their own proprietary credit model to produce a credit score on you using their credit scoring algorithms. Consumer credit reports are not always accurate. It is up to you to make sure that it is. But even when you notice something strange it is not always so easy to quickly clear up an obvious error.

In this Brandon Blog, I will tell you the story of Angela Monaghan, an Ontario high school teacher. I will tell you how a very rare error caused her two years of grief when her credit score took a massive credit score drop down to zero!

Credit report from Equifax: What is a Consumer Credit Reporting Agency?

Consumer credit reporting agencies are businesses that collect and analyze information from customers of other businesses, primarily companies that have extended credit to you, but also from public records. The CRA’s primary goal is to provide you with an accurate and complete report of your credit information and its protection.

What is your credit report from Equifax?

You should know what goes into your credit report from Equifax Canada Co. or TransUnion Canada and how your financial behaviour may impact you and your credit. When you think of credit, you should think of Equifax Canada Inc. and TransUnion Canada. They are the two Canadian credit bureaus that hold your Equifax credit report, which is a snapshot of your credit history.

They provide information about what you owe, who you owe it to and what your balances and payment history look like. In addition, their databases reflect your consumer behaviour and determine the risk level associated with any individual that a credit report is requested for because you are applying for any type of credit and permitted that bank or company to do a credit check on you.

A credit report normally includes:

  • your name
  • age and current address
  • your job and where you work
  • what debts you have
  • your paying habits (do you usually pay on time or are your payments late, do you only make minimum payments)

A credit report does not include: a bankruptcy discharged more than 7 years ago unless you have declared bankruptcy more than once. Your credit report, summarizing all this information into a consumer credit score, affects your ability to get credit, which can affect your ability to buy a car or home.

The Ontario Consumer Reporting Act (OCRA) is the legislation that regulates consumer credit reporting in Ontario.

credit report from equifax
credit report from equifax

What is the Ontario Consumer Reporting Act?

The Ontario Consumer Reporting Act (OCRA) is the provincial legislation that regulates consumer credit reporting in Ontario. The OCRA creates the rules under which a consumer reporting agency operates. Examples are:

  • how a consumer’s credit report can be used
  • when someone can request a credit report
  • what consumers can do if their files contain any wrong or incomplete information and many more issues are covered by this provincial law.

OCRA recognizes that businesses, landlords and employers need to have the correct information.

At the same time, it makes sure that:

  • agencies collect, maintain and also report your debt and personal information sensibly and as accurately as possible
  • your right to recognize what is being reported concerning you and also to whom
  • your right to remedy details regarding yourself that are inaccurate.

A party who is convicted of purposefully supplying a consumer reporting business with false or incorrect or deceptive information could be fined up to $25,000 or sent to prison for up to 1 year, or both.

Credit report from Equifax: The Angela Monaghan TransUnion Canada story

A Tiny, Ont. high school teacher, Angela Monaghan still keeps in mind the moment she went to her neighbourhood Canadian Tire in the summer season of 2019. She went there to make an application for a new store credit card to use for expenses related to the school orchestra.

The request was promptly rejected. The application had been flagged because according to her credit file, she recalls the Canadian Tire employee, matter-of-factly stating that she was dead.

The one that had actually passed away was her late husband who had passed away from cancer. Yet as she tells her story, she later uncovered a reporting mistake that indicated she, rather than her late husband, had been declared as dearly departed on her TransUnion credit record by a reporting error.

As soon as the consumer reporting agencies are alerted of someone’s death, they position a death notice on their credit report. This step is meant to stop identity theft. However incorrect death reports do take place periodically. Identity thieves and other criminals always try to use a deceased person’s identity for their own illegal gain.

It took her virtually 2 years from when she became aware of and reported the error to TransUnion to have it officially and fully corrected. During that time, she claims she needed to cope with a TransUnion credit report of zero!

Credit report from Equifax or TransUnion: Be proactive

What happened to Angela Monaghan is very frustrating. After the loss of her husband, this is the last kind of trouble she needed. But you can be proactive. You don’t have to wait until you apply for credit to find out if there is an error on your credit report.

The consumer reporting agencies allow you to apply for your own credit report once a year for free.

How Do I Get My Free Credit Report?

You can request your free credit history report by one of several techniques: credit report by phone, by mail or in person. If you’re asking for your credit report by phone, you will need to enter your Social Insurance Number. You’ll need to send acceptable identification validating that you say who you are and your mailing address if you are asking the credit bureau by mail. Photo identification such as your driver’s licence can identify both you and your current home address at the same time. This is one type of acceptable documents.

Everyone qualifies to receive a free credit report annually from each of the two Canadian credit report reporting companies.

How do I confirm my identity?

In addition to the above, identity confirmation is done by responding to a series of individual and financial questions, where one of the possible answers to each question is a fact about yourself. They will only send you your free credit report by mail.

How much does it cost to order my credit report?

As I already stated, Equifax Canada and TransUnion Canada each allow you to order your credit report once annually for free. So if you really wanted to stay on top of reviewing the information the credit bureaus have on you, you could order from each of them once a year, 6 months apart.

credit report from equifax
credit report from equifax

Correct an inaccuracy on your Equifax credit report: How do I dispute my credit report from Equifax?

Credit reports matter. Let us assume that you have been checking your credit report from Equifax regularly and you find something you believe is a credit report error or potential inaccuracy and should be removed from your file. The error can be as drastic as the one Angela Monaghan had or something a little less distressing, yet still troubling. If you find such an error, you need to initiate an investigation.

What are the steps to dispute information on your credit report from Equifax? There are two ways to submit your dispute info to Equifax for free – online submission or by mail. You of course have to file supporting documentation to prove your dispute is valid.

Once you’ve successfully filed your dispute by mailing the Credit Report Update Form or completing the Equifax Online Dispute, there will be an investigation of your dispute. When reviewing your dispute, if they can make changes to your credit report based on the information you provided, they will do so.

People ask me how long will my investigation take? Equifax states that their dispute process is completed in 5-20 business days. However, they also say that due to COVID-19, investigations and dispute resolutions are experiencing longer than normal processing times for dispute investigations. After their investigation is complete, a confirmation letter or email will be sent to you with the results and outcome of the investigation.

We see their time estimate is not always accurate. It took Angela Monaghan two years to correct the fact that she was not deceased! If you dispute an item and the investigation did not resolve the dispute, you have the right to add a statement to your credit file that is 400 words or less, free of charge, explaining the nature of your dispute.

Spot identity theft early. Review your credit reports.

Inaccuracies on credit reports can be simple errors, or much worse, you could be a victim of identity theft. So much of our financial lives and financial history is stored in computer databases. Computer hackers steal and sell such personal information which is why identity theft continues to be on the rise. As a matter of fact, an Equifax data breach by hackers took place from mid-May through July 2017. Amongst the stolen information were Social Insurance numbers.

With such theft, thieves use your personal information to open up credit card or loan accounts, run up each credit card balance to their respective credit card limit to purchase goods and never pay a cent. When the debts go into arrears, you start getting calls from collection agencies and your credit rating takes a drastic reduction. One of the more common signs of identity theft is a credit card opened up in your name without your knowledge. Having this happen to you could be devastating to you, especially if you have a consistent payment history of paying your credit card in time every month and all of your other debts on time.

It is up to you to confirm that you are not the one who opened these accounts. It is a painstaking and sluggish procedure. You will most likely have to ask for a copy of the real application from the financial institution and match up your genuine signature against the one given on the application to confirm it was not you. It will certainly take some time, however ultimately, you will get it corrected.

There is also one more means to keep up to date with what is happening with your credit report from Equifax, however, it will cost you some cash.

What is credit monitoring?

If you use credit cards, you may one day either be or know someone who is, a victim of identity theft. Bank cards and other types of credit scams are a serious problem, as well as one that is promptly growing as more individuals utilize plastic, including debit cards, e-Transfers or online bill payments to settle their debts. A credit tracking solution can help you stay one step ahead of credit card fraud.

Both Equifax and TransUnion, along with many credit card issuers and financial institutions, provide credit report monitoring solutions. Equifax calls their product Equifax credit watch. Transunion Canada also has a subscription-based credit monitoring service.

These solutions monitor your credit activity and give you a regular report with alerts after certain updates to your credit file, such as a credit inquiry. If fraud is suspected, you will get an initial fraud alert.

You can think about using this service if you:

  • believe you’ve been the victim of fraud;
  • if you have actually been affected by an information breach; or
  • you just wish to guard in real-time against identity theft.

This service will help you see if somebody is trying to apply for credit in your name. You will be able to spot identity theft in more or less real-time. However, you usually are required to spend money to get this type of protection. Monitoring things twice a year using your free credit reports in most cases should be enough for the average person.

credit report from equifax
credit report from equifax

Credit report from Equifax summary

I hope that you found this credit report from Equifax Brandon Blog informative. Many people feel that they are trapped in a cycle of credit card debts, unsecured lines of credit, tax debt and generally an unmanageable level of debt. Some of this may have come about because you are a victim of identity theft. You may want to do something about those debts but you aren’t sure what to do.

If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, Contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

credit report from equifax
credit report from equifax
Categories
Brandon Blog Post

SOFT CREDIT CHECK: TWEAKS YOU CAN DO TO MAKE IT HARD AND HAPPY

soft credit check
soft credit check

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom and click play on the podcast.

Soft credit check introduction: What is a credit score?

When you apply for a loan, or to rent someone’s house, condo or apartment, the bank or landlord will very likely do a credit check on you. What will be of importance to them, amongst other things, is your credit score.

A Canadian credit score is a three-digit number used to indicate the creditworthiness of a debtor, based upon the info in their credit report. It is determined by looking at several factors, including if you usually pay your bills on time, just how much of your readily available credit you use, the number of charge cards you have, as well as your basic level of financial debt. The score ranges from 300 to 900 and also represents the chance that you will pay every one of your expenses on time.

There are two methods that either you or a potential lender can do a credit check on you: soft or hard. Keep in mind that even a potential landlord can fall into the category of prospective lenders. They will be advancing your credit in the form of their property. They are entrusting the tenant to take possession of their property, in return for paying for that privilege every month. In that way, a landlord is also extending credit to a tenant.

Have you ever wondered what the difference is between a soft credit check and a hard credit check? Well, in this Brandon Blog I am going to explain the difference between them for you.

Overview: Hard vs. Soft inquiries on your credit report (And Why They Matter)

The hard inquiry is a credit check that will show up on your credit report. These types of inquiries are typically the result of applying for a new loan, credit card or insurance quotes. A hard inquiry will typically stay on your credit report for up to 3 years.

A soft inquiry, on the other hand, is a credit check that does not show up on your credit report but is visible to creditors. A soft inquiry could be the result of checking your own credit score or shopping around for a new cell phone or cable plan.

More details: What is the difference between hard and soft credit inquiries?

What is a soft credit check you ask? A soft credit check request is something you can do at the beginning of your search for a loan. It will help you to know what your credit score is to help you get better loan rates, special promotions or offers a bank may be running or even help you secure that loan for which you might not qualify if your credit score was outside of an acceptable range. Knowing that information upfront can help you negotiate better for that loan deal you want.

A soft credit check is a surface-level credit inquiry that is used to get a preliminary assessment of your creditworthiness. These take place when you check your credit report or when a lending institution checks your score to pre-approve you for special deals. Soft checks do not influence your credit rating.

A hard credit check is basically a check performed by a company to find out your credit history and score. A hard credit check is different than a soft credit check. Hard checks are performed by companies that decide whether or not to lend you money. Sometimes, a hard check is also referred to as a hard credit inquiry. While a hard check is more informative than soft pulls, it can also adversely affect your score if too many checks are performed.

Sometimes you will enter into a contract for a product or service that requires you to provide authorization on the credit applications to access your credit report and credit score. Whether you are applying for a cell phone contract, to a credit card company, or applying to mortgage lenders or for auto loans, the company is going to check your credit report and score. Knowing what is a “hard credit check” can help you decide if it is worth it to use the service or not.

soft credit check
soft credit check

How could a hard credit check affect your credit score when a soft credit check will not?

Many consumers have a good credit score, but when you are one of the millions of consumers who do not, it can be difficult to get that coveted loan or credit card. To make sure that you do not have to deal with a hard credit check, you should make sure that you have no missed payments on your credit reports and that you have a diverse mix of credit (credit cards, store cards and installment loans, for example).

A hard inquiry can harm your credit score, but usually by just a few points. But how much your score is affected can depend on your specific financial situation.

Having too many inquiries on your credit report especially within a short period of time may also have an impact. And if your credit report shows multiple credit applications within a short period of time, it might appear to lenders that your finances have changed negatively.

When you apply for credit, as I mentioned, a hard credit score check is the way a potential lender can take a deep dive into your credit history. A putative lender would do so to determine if they should approve you for the credit you are applying for. This is different from a cursory soft credit check so a lender can tell you if you might qualify for a special deal or are doing your own self-assessment.

If you’ve ever before been denied for financing, denied an apartment, or had your car loan application rejected, you probably went through a hard credit check and the financial institution or landlord you approached was not happy with your results.

Soft credit check: How your initial credit limit is determined

The normal question individuals typically ask is why their credit line is not higher. In fact, the question is so usual, some credit card companies have their own applications that you can use to forecast your credit line. Nonetheless, as you may anticipate, the response is not quite as straightforward as the credit card issuers would like you to believe.

Your credit rating is an important metric in establishing what your credit line will be set at. If you have an inadequate credit rating, expect a lower credit limit and various other unfavourable terms. On the other hand, a high credit score offers you the opportunity to shop around to find the best credit card agreement and credit card issuer for you.

Soft credit check: Who creates your credit report and credit score?

Each time you make an application for a credit card, a car loan or home mortgage, your credit report is evaluated by the loan provider you are applying to. Your credit report is a document of the financial commitments you have actually currently incurred (credit cards, personal loans, lines of credit and mortgages) and your payment history. It is obtained from one of the two credit bureaus in Canada.

By now you should understand that the higher your credit score, the better your chances are to be approved for the loan or credit card you are applying for. This is because your credit rating will be seen as a lower threat to default, and therefore the bank will feel more positive that you will pay off any credit extended to you.

TransUnion and Equifax Canada are the two credit bureaus in Canada that contain your credit information. Lenders will use one of these two businesses to do the soft credit check or the hard credit check on a potential borrower or existing customer requesting additional or new credit.

These are private businesses that collect, store and share details concerning just how you use debt. Equifax Canada and TransUnion just collect information from creditors concerning your financial experiences in Canada.

soft credit check
soft credit check

Can a lender do a soft credit check or any type of inquiry without my permission?

If you are applying for credit from a financial institution or another type of lender, you will be asked to provide the authorization for them to do search one of the two major credit bureaus in Canada on you as part of their normal credit process. A lender cannot perform a hard credit pull without your OK.

No pre-authorization is required to do soft pulls. Perhaps you wish to just discover if you meet the requirements for a unique promo they may are promoting on one or more of their credit products. Or, possibly the loan provider wants to get a quick picture of your credit file to see if it is worth investing the time running you through their credit application process. The lender can get a response to both issues by carrying out a soft inquiry on you. That they can do soft credit pulls on their own.

Soft credit check: How long inquiries stay on your credit report

Your credit rating is a snapshot of your financial life, and it is important for obtaining credit, renting an apartment, even getting a job. But what happens if you want to buy a house, apply for a job, or apply for a loan and you have a negative or positive inquiry on your credit report? It is important to know how long an inquiry will remain on your report.

The rules surrounding credit inquiries and how long they stay on your Canadian credit report are a little different than in the US. In the US, hard inquiries generally stay on your record for 2 years. In Canada, there is no specific set amount of time that they stay on your report. The length of time a new inquiry is reported is determined by the business that requested the inquiry. According to Equifax Canada, a hard inquiry may not drop off your report for up to 36 months.

Home & Car Insurance Savings From Good Credit Scores

If you’ve ever shopped for auto insurance or homeowners insurance, you’ve no doubt been pressured to buy coverage you don’t need or a policy that seems like the insurance costs are just too high? If that sounds like you, don’t be ashamed! To avoid this, you should first know your credit score, since that will be the key to getting the best insurance rates.

A good credit score does more than simply affect the interest rates you pay on loans – it also affects the rates you pay on your insurance. This is because insurance companies consider your credit score when setting the rates you pay because it correlates to your likelihood of filing a claim and the likelihood of that claim being paid.

In addition, your mortgage company, your landlord and your car dealership will check your credit score when renting property, leasing a car or deciding how much of a down payment you can afford.

soft credit check
soft credit check

Can prospective employers perform a credit check on me?

If the job application you signed gives a potential employer permission to do a hard inquiry on you, then they can. Bad credit history can have many consequences that far exceed a simple refusal to get a loan. It can prevent you from getting a job, and destroy your self-esteem. How do you know if your bad credit is affecting your life? The first step is to find out what’s on your credit report.

The next step is to realize that your negative financial situation didn’t happen overnight. Your financial problems are a result of both bad luck and poor judgment.

Most of us have been there: you’re ready to start your career, turn over a new leaf and begin a new chapter in your life, but you get rejected for a job because one of the background checks turns up a bad credit report. And you are confused. You didn’t know that your report included bad credit information. And you didn’t know that you could fix a bad credit report.

But you can. As I already mentioned, it starts with you doing a soft inquiry on yourself and finding out what the bad information is. Or, once a year, for free, you can do a hard inquiry on yourself and really drill down to find out what negative information is causing the roadblock to your moving forward in life. I highly recommend that you do so as the start to improving your financial situation.

Soft credit check a summary

I hope you enjoyed the soft credit check Brandon Blog post. You may be very upset and frustrated over the current pandemic situation and your personal financial problems. You may even be downright depressed. The entrepreneur may be very frustrated that the company can no longer pay all its debts as they come due.

There may be sufficient value to take care of the secured creditor, but nothing for anyone else, including the unsecured creditors. There may be some business units that should not survive, but if cut out, the business will be viable. A receivership might very well accomplish the goals for the entrepreneur also. I have many times structured a receivership process, in order to meet the goals of the entrepreneur, while satisfying the requirements of the secured creditor.

Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

soft credit check
soft credit check

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Call a Trustee Now!