How Can I Rebuild My Credit While I’m In Debt?

Fairstone
Author:
Fairstone
Fairstone
Expert Contributor at Loans Canada
Caitlin
Reviewed By:
Caitlin
Caitlin Wood, BA
Editor-in-Chief at Loans Canada
Caitlin Wood has more than a decade of experience helping Canadian consumers learn how to take control of their finances. Expertise:
  • Personal finance
  • Consumer borrowing
  • Credit improvement
  • Debt management
📅
Updated On: February 2, 2024
iCash

Ad Disclosure

Approval is not guaranteed and conditions apply.

British Columbia Residents: iCash offers payday loans in British Columbia (license number: 67639)

Ontario Residents: Loan amounts and repayment terms are subject to qualification requirements. The maximum allowable cost of borrowing under the payday loan agreement is $14 for every $100 advanced. On a $500 loan of 14 days, the total cost of borrowing is $70, with a total payback amount of $570 and an APR of 365%. On a loan of 62 days, the APR is 82.42%.

Manitoba Residents: To learn more about your rights as a payday loan borrower, contact the Consumer Protection Office at 1-204-945-3800 or 1-800-782-0067 or at www.manitoba.ca/cca/cpo

Nova Scotia Residents: Payday loans are High Cost Loans. The maximum allowable cost of borrowing under the payday loan agreement is 14$ per every 100$ received, which means on a 100$ loan for 14 days, the total cost of borrowing is 14$, with total payback amount of 114$ and an APR of 365.00%.

PEI Residents: Loan amounts and repayment terms are subject to qualification requirements. The maximum allowable cost of borrowing under the payday loan agreement is $14 for every $100 advanced. On a $300 loan of 14 days, the total cost of borrowing is $42, with a total payback amount of $342 and an APR of 365.00%. On a loan of 62 days, the APR is 82.42%.

The Cashback Program and Refer a Friend Program are not available in Manitoba, British Columbia and New Brunswick.

Get a free, no obligation personal loan quote with rates as low as 9.99%
Free quote with no impact to your credit

Sponsored by

Fairstone logo

For this blog, we’ve teamed up with our partners at Fairstone.

The amount of debt you have plays a role in your credit score, but it’s not the only thing that affects it. Credit utilization, payment history, and credit inquiries are all factors that can impact your credit score.

We asked our partners at Fairstone to provide some tips on how to rebuild your credit while you’re in debt.

Keep your credit card balance below 25% of your limit

Even if you’re making payments on time, carrying a high balance on your credit card can negatively affect your credit score. What exactly do we mean by a ‘high’ balance? As a general rule, using anything more than 25% of your available credit limit can hurt your credit score.

You can request a limit increase to lower your credit utilization, but if you’re denied an increase, or you’re struggling to pay down your balance, consider consolidating credit card debt to make it more manageable to pay off.

Limit credit card purchases to a few set expenses a month

Another way to lower your credit utilization is to only put a few set expenses each month on your credit card (and make sure these expenses use less than 25% of your limit). This will help increase your credit score, and ensure the amount you have to pay off each month is predictable and manageable, which will also positively impact your payment history.

Setup automatic payments to make bill payments on time

Some people are surprised to hear that your balance and payment history on regular bills like phone, TV, and internet are reported to the credit bureau. Whether you’re carrying debt or not, missed or late bill payments can reflect poorly on your credit score. We suggest setting up automated payments to avoid missing a payment; over time this can help improve your payment history and your credit score.

Combine multiple bills into one monthly payment with a consolidation loan

Are you struggling to manage multiple debts and payment deadlines? A debt consolidation loan allows you to combine multiple bills into one payment. By only having one payment to worry about, you’re more likely to make payments on time. Not only will this help your credit improve, but making regular payments will also help you pay off debt faster.

Keep credit inquiries to a minimum

A credit inquiry can be anything from applying for loan or mortgage to filling out an application to rent an apartment. If you’re looking to improve your credit score, you should wait three to six months between inquiries, as more than that can reflect poorly on your credit score.

When you want to avoid credit inquiries, beware of certain situations where you may not expect a credit check, like shopping for a car. If you go to a car lot just to look around, the salesperson may ask you for your information and could end up doing a hard credit check, even if you weren’t planning on making a purchase. Make sure to always ask whether someone is doing a hard credit check before handing over identification and/or your social insurance number.

Remember that paying off debt isn’t the only solution for improving your credit score. It’s also important to consider other factors that affect your credit score, like payment history, credit utilization, and credit inquiries, in order to set yourself up for a better financial future.

Looking for more information on credit? Click here to read Fairstone’s article on how credit scores work.

Fairstone avatar on Loans Canada
Fairstone

Fairstone Financial is a leading alternative lender in Canada, they have been helping Canadians since 1923. Their mission is to provide Canadians, with fair to good credit, with an affordable alternative to payday loans.

More From This Author

Special Offers

More From Our Experts

https://loanscanada.ca/wp-content/uploads/2013/04/Remove-Item-From-Credit-Report.png
How To Remove A Negative Item From Your Credit Report

By Lisa Rennie
Updated on September 5, 2025

Is there an error on your credit report? Learn how to remove a negative remark from your credit report in Canada.

https://loanscanada.ca/wp-content/uploads/2020/12/Renting-an-Apartment-With-Bad-Credit.png
How To Rent An Apartment With Bad Credit

By Lisa Rennie
Updated on September 4, 2025

Wondering how to get an apartment with bad credit? Check out this post to see how a bad credit score can affect your application.

https://loanscanada.ca/wp-content/uploads/2021/02/Rent-Payments-Build-Credit.png
Can Your Rent Payments Help You Build Credit?

By Lisa Rennie
Updated on September 4, 2025

Can you use your rent payments to build credit in Canada? With the help of rent reporting services, these payments can be reported.

https://loanscanada.ca/wp-content/uploads/2021/11/Do-Cell-Phone-Bills-Build-Credit-In-Canada-1.png
Does Your Phone Bill Affect Your Credit Score In Canada?

By Lisa Rennie
Updated on September 2, 2025

We all know that our credit cards and personal loans affect our credit, but does paying your phone bill build credit?

https://loanscanada.ca/wp-content/uploads/2021/06/Walmart-Rewards-Mastercard.png
Walmart Rewards Mastercard Review

By Lisa Rennie
Updated on August 27, 2025

Do you often shop at Walmart? Then you should consider the Walmart Rewards Mastercard. You can accumulate points that can then be redeemed at Walmart.

https://loanscanada.ca/wp-content/uploads/2021/07/Best-Newcomer-Credit-Cards-Canada.png
Best Credit Card For Newcomers In Canada 2025

By Lisa Rennie
Updated on August 19, 2025

As a newcomer in Canada getting a credit card can be difficult. Check out out list of the best credit card for newcomers in Canada.

https://loanscanada.ca/wp-content/uploads/2014/12/can-you-get-a-credit-card-without-a-job.png
How To Get A Credit Card Without A Job

By Lisa Rennie
Updated on August 8, 2025

Can you get a credit card without a job? While it may be more difficult, you do have options. Learn more here.

https://loanscanada.ca/wp-content/uploads/2018/03/credit-score-450-1.png
What A 450 Credit Score Means – And How To Improve It

By Lisa Rennie
Updated on August 7, 2025

If you currently have bad credit and are interested in more information about whether you will qualify for a loan, this article is for you.

Recognized As One Of Canada's Top Growing Companies

Why choose Loans Canada?

Apply Once &
Get Multiple Offers
Save Time
And Money
Get Your Free
Credit Score
Free
Service
Expert Tips
And Advice
Exclusive
Offers