How to Apply for Debt Consolidation with Bad Credit History

Posted on 8th May 2015

Canadian debt levels are at record highs and more and more households are finding it difficult to repay their various debts. Debt consolidation is a great way to repay all your debts at a lower interest rate. Even if you have bad credit, debt consolidation loans are one of the easiest ways to reduce your debt and repair your credit.

Canadian Debt Levels Rise

According to the most recent data, more and more Canadians are getting into debt. Statistics Canada reports that between 1999 and 2012, the median debt held by indebted Canadian families increased by $23,000 to $60,100.

The number of Canadian households with debt (mortgages, car loans, lines of credit, personal loans, and student debt) also increased during the same timeframe from 67% in 1999 to 71%. The “median” is the middle figure that separates the top half of families with the most debt from the lower half.

At the same time, the value of assets held by Canadian families grew at an even greater rate: 80%, or $179,800, to $405,200. The value of assets encompasses financial assets like investments (stocks and bonds), pensions, and non-financial assets like real estate.

Unfortunately, the increase in property value doesn’t really benefit many Canadians, nor does it offset their personal debt. That’s because the increase in the value of real estate is only tangible if you sell your property.

Consolidating Debt

What this most recent data shows is that the majority of Canadians run into money problems at some point. The biggest challenge is knowing how to deal with out-of-control debt. One of the best ways to get a handle on debt is to consolidate it into one convenient payment. That’s because different forms of debt often come with different interest penalties.

For example, a major credit card might have a monthly interest fee as high as 19%. Charges for specialty store credit cards can be as high as 29%. A student loan, on the other hand, will have a much lower interest rate. And in today’s low interest rate environment, fixed mortgages can be found for 2.75%.

Ultimately, by consolidating your debt, you increase your leverage by lowering your interest rate, allowing you to pay off your debt more quickly. Those thinking of consolidating their debt can use assets like their home to secure a lower interest rate. Choosing to consolidate your debt as opposed to declaring bankruptcy will protect your credit rating. Not only that, banks will see you as being a less risky investment.

What If You Have Bad Credit?

Unfortunately, it is more difficult to get a consolidation loan if you have bad credit—but it isn’t impossible. Lenders want to know how risky it is to lend you money. To determine this, they look at your credit scores and bill payment history. A low credit score or history of skipping bills is a red flag for lenders.

Fortunately, the lending landscape has improved over the last number of years. Those with bad credit looking to consolidate their debt are no longer stuck using Canada’s big banks or financial institutions. Today, there are many different lenders willing to work with and finance those with bad credit.

There are a number of steps you can take to consolidate your debts and get your credit back on track. Remember, your credit history does not stay the same. It changes in step with your financial situation., the Leaders in Debt Consolidation

When it comes to having bad credit and consolidating debt, it’s known to get complex. That’s why it’s important to be fully aware of all the different options. It’s also why you need to talk to an independent, licensed agent at . They can show you how to rebuild your credit and help you find the best consolidation loans.

Where Canada’s big banks only promote their own financial products, agents are independent and have your best interests in mind. We have access to hundreds of lenders, many of which provide loans to those who have bad credit or have filed for bankruptcy.

To find out how you can rebuild your credit score and consolidate your debt, contact today or apply online and a mortgage specialist will set up an appointment at your earliest convenience.

“Study: Changes in debt and assets of Canadian families, 1999 to 2012,” Statistics Canada web site, April 29, 2015;

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