The Truth about Ruining Your Credit

By Caitlin in Credit
The Truth about Ruining Your Credit

No one really likes to talk about the debt they have or the credit card balance they’re currently carrying, it’s not a pleasant topic and for some it’s downright depressing. Don’t worry we don’t think you need to start discussing your debt with everyone in your life but you do need to be honest with yourself and decide if you want to continue to be in debt or start to rebuild your credit. If you’re currently struggling with your credit here are a few truths that you need to know.

Truth #1: Don’t Ignore Your Credit Score

Your credit score is very easy to ignore, it’s not easily available to you and you need to pay a fee to see it which basically means no one ever wants to check up on it. We completely get it, why pay for a three digit number? The simple answer is that your credit score is a vital part of your financial life, it can either facilitate or prevent you from getting a loan or more credit. It’s your personal credit history summed up into three small numbers. If you’re currently having trouble with debt or if you’re looking to take out a loan or apply for a mortgage you need to know what you credit score is because you’ll be rejected if it’s too low.

Your credit score ranges from 300 to 900. You should always aim to be above 700, but the higher your score the better chance you have of being approved. A credit score is based on the following criteria:

  • How long your credit accounts have been open
  • The total amount of debt you current have
  • Whether or not you make your payments on time
  • Whether or not you’ve ever gone over your credit limit

Potential creditors or lenders are looking for financial reliability and having a high credit score shows that you are in fact reliable. Other factors are taken into consideration as well and some lenders don’t even look at credit scores but if your debt and your financial health are currently on your mind you need to stop ignoring your credit score and check it out.

For more information on how your credit score is calculated check out our Credit Score Breakdown video.

Truth #2: Creating Debt Is Easy

The most dangerous thing about debt is how extremely easy it is to create; it doesn’t take long to let your bad financial habits take over and ruin your credit. What’s even more dangerous is that it’s often not the large purchases that put us into debt, it’s the small things. We all know when it’s appropriate and when it’s not appropriate to buy a new car or go on a vacation. What the average person has trouble with is the daily expenses that start to ad up; a coffee every morning, dinner out too many nights of the week and those impulse purchases at the mall every weekend.

Spending what you don’t have is one of the fastest ways to get into debt but there are countless other ways to mismanage your money, here are few you need to consider:

  • Failing to have any kind of budget or failing to track your spending.
  • Having no emergency fund and charging any unexpected expenses to your credit card.
  • Charging any kind of weekly, monthly or yearly bill to your credit card.
  • Purchasing items with your credit card that you cannot afford to pay for with cash.

If any of these scenarios seem familiar to you then you need to consider the ramifications of your actions and rethink how you’re managing your money.

Truth #3: Getting Out of Debt is Hard

While creating debt is probably one of the easiest things you can do, getting out of debt is one of the hardest. It takes serious time, effort and commitment. Depending on the amount of debt you have you could spend up to 5 years working on paying it off and then even more time creating healthy financial habits to prevent debt from happening again.

For people in extreme situations there are lots of different options including:

  • Debt consolidation
  • Credit counselling
  • Debt management programs
  • Consumer proposals
  • Bankruptcy

If you feel like these options are too intense and you wish to tackle your debt issues on your own there are countless changes you can make and steps you can take to reduce your debt load:

  • Get a second job or supplement your income.
  • Stop using your credit cards all together and live off the actual money you make.
  • Always focus on your debt that has the highest interest rate first, then work your way towards your debt with the lowest interest rate.
  • Create a budget and a plan and then start implementing it into your everyday life.
  • Get in contact with your lenders and creditors; see if they’re willing to work with you so you can pay them back as soon as possible.
  • Look into getting advice from a credit or debt management counsellor, you don’t have to commit to a program but some professional advice might be exactly what you need.

Work towards Your Goals

Everyone’s debt is different so you need to choose a solution that best suits you, if working towards being debt free on your own is what you want to do then go for it. If getting help from a professional is something you feel you need then do that. It’s your debt and your life so set some goals and then work every day to accomplish them.


All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster.

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