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Whether you’re looking to improve your credit scores to buy a house or want to get back on track after a financial setback, there are a variety of credit solutions available to all Canadians. The right credit solution will depend on your needs, credit health, and ultimately your credit improvement goals.

Credit Solutions Available To Canadians

Credit issues are typically caused due to mismanagement of debt. Below is a list of credit solutions to help you solve your debt problems and thus improve your credit. 

Credit Counselling

One of the best ways to get a handle on your finances and debts is by speaking to a credit counsellor. They are debt relief specialists that can provide credit solutions and advice.  When you visit a credit counsellor they will evaluate your overall finances including your income, savings, and debts. Based on your financial situation, they will either help you create a budget to help you gain control of your finances or offer you more extreme solutions like bankruptcy.

The exact solution will depend on your financial situation. 

Budgeting

Budgeting is one of the most simplistic credit solutions available, but it also can have a big impact on your finances. With a proper budget in place, you can not only pay down your debts but build your savings. 

Budgeting involves setting monetary amounts toward how much you spend based on how much you earn. There are many budgeting apps available to help you budget if you don’t want to go old school with a pen and paper. Budgeting is ideal if your credit issues aren’t severe and you merely need to control your spending. 

Credit Monitoring

Keeping tabs on your credit report and scores is a good way of tracking and understanding your credit. Pulling your credit report can help you understand what type and amount of credit you’re dealing with. It can also help you identify what’s causing your bad credit and if there are any errors on your credit report that may be unfairly dragging your credit scores.

Secured Credit Card

A secured credit card is a good credit solution as it almost guarantees approval and can help you build credit. Like a regular credit card, you can use a secured credit card to make purchases up to the credit limit. Your credit limit is determined by the security deposit you provide, which can be as low as $50 depending on the provider. As you make payments, your provider will report them to one or both credit bureaus which will help you build your payment history

Best Secured Credit Cards

Annual FeeInterest RatesMin. Deposit
Neo Secured Credit$0- 19.99% - 26.99%
- QC: 19.99%-24.99%
$50
Capital One® Guaranteed Secured Mastercard®$5919.8%$75 or $300
Home Trust Secured Visa Card0$ or $59- 19.99% (no annual fee)
- 14.90% (with annual fee)
$500
Vancity enviro™ Secured Visa* card$0 - $39511.25% or 19.50 %$500
TD Cash Secured Credit Card$2927.74% variable APR$300

Other Credit Solutions Available to Canadians

For more serious credit issues caused by excessive debt, consider the following debt and credit solutions.

  • Debt Consolidation Loan – A debt consolidation involves taking out one big loan to pay off all your debts. The goal is to use a low-interest loan to consolidate all your high-interest debts. This will not only save you on interest but make it easier to track.
  • Debt Management Program (DMP) – A debt management program is a 3-5 year program that helps you pay off your debts. Managed by a credit counsellor, a DMP can lead to lower interest rates and an affordable payment plan. 
  • Debt Settlement – Debt settlement is the process of negotiating with creditors to make a smaller payment than what is owed, as opposed to none, that will be considered full payment. 
  • Consumer Proposal – A consumer proposal is a legal process where you create a payment proposal for your creditors. Through it, you could pay off your debts by paying a portion of the debts you owe over up to 5 years.
  • Bankruptcy – Bankruptcy is a legal process that relieves you of your debts because you can no longer manage your debts. When you file for bankruptcy, you enter a payment program, which you’ll be discharged from after 9-18 months.

At this point, it is important to note that there is no miracle credit solution that will wipe away your problems. The reality is that these credit solutions involve work, sacrifice, and commitment to successfully eliminate debt. Anyone who promises you that their debt solution will wipe your credit issues with the snap of their fingers is likely lying or part of a scam. Unfortunately, it is easy to get into debt, but hard to get out. 

What Can Cause Credit Issues?

Credit issues can arise from a number of actions. Sometimes credit issues are a result of one action and sometimes they are a result of many moving parts. Below are some situations and habits that can result in credit issues. Keep in mind that these are not the sole causes of credit issues, but they are the most common and prevalent. 

  • Using Your Credit Card Irresponsibly – If you’re maxing out your credit cards and failing to make payments, you’ll be affecting two major factors that are used in calculating your credit scores: payment history and debt-to-credit ratio
  • Not Budgeting Your Loan Payments – Taking out more debt than you can afford can lead to missed payments which can negatively impact your credit. Before taking out a loan, it’s important to create a budget around it to ensure you can afford it. 
  • Financial Emergencies – Some credit issues are a result of unexpected financial problems.  Job loss, medical problems or disability can make it difficult to meet your current debt obligations.

How Poor Credit Can Affect Your Life

Now that we know the potential causes of credit issues, the question becomes: how do they impact your life? Poor credit can not only impact your ability to get a loan, but it can also impact your ability to rent a place or get a job. Here are some ways poor credit can affect your life: 

  • Harder To Rent A PlaceLandlords usually perform credit checks as part of their tenant screening process. If you have poor credit and a history of missed payments, your landlord may reject your application. 
  • Higher Premiums – Insurance providers often use credit scores when determining your insurance premiums. The lower your credit, the more risky you’ll seem, which may lead to higher premiums.
  • Harder Time Qualifying – When you apply for a credit product, your ability to qualify will be lower than someone with good credit, particularly with a traditional financial institution such as a bank. 
  • Higher Interest Rates -Borrowing with bad credit is a lot more expensive than someone with good credit. Lenders will generally charge higher interest rates to those with bad or poor credit.

Bottom Line

At one point or another, you may face some credit issues which can be caused by a variety of reasons. Whether your credit problems are big or small, Loans Canada can help you find the best credit solution for you. 


Veronica Ott avatar on Loans Canada
Veronica Ott

Veronica is a writer who specializes in creating unique and educational personal finance content. She has extensive experience writing blog posts for companies in the financial sector. Veronica's background is in accounting as she graduated from Western University in 2017 with a degree in accounting. She is passionate about using her accounting expertise to help others with their personal finance questions and issues and enjoys using her writing to educate Canadian readers. When Veronica is not writing, she enjoys film, reading, travelling, going to the gym, and listening to music.

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