THE TOP CAUSES OF POOR CREDIT SCORES IN CANADA
What do you think causes bad credit? In this article, we’ll take a look at the top 5 causes of bad credit in Canada – some of them may surprise you.
MAXED OUT CREDIT CARDS AND HIGH CREDIT CARD BALANCES
Overusing your credit cards and paying the mandatory minimum balances causes BAD Credit
A high credit utilization on your cards is a sign that,, you don’t have the ability to pay down the debt that’s collecting on your cards, making you a credit risk.
HAVING AN ACCOUNT SENT TO COLLECTIONS
If your credit card account is sent to a third-party debt collection agency, your credit status will reflect the fact that your credit card company was unable to collect payment from you, and your credit score will be damaged.
CREDIT CARD CHARGE-OFFS
Usually, this happens after 6 months or more of missed payments, and this status will negatively impact your credit score from 3-7 years.
DEFAULTING ON A LOAN
Defaulting on a loan is disastrous for your credit score, similar to a credit card charge-off.
The Lender declares that you are unlikely to pay your debts, and then demands payment in full for the debts that you owe taking legal action, where applicable. This can also be devastating to your credit score.
Failure to repay an any type of loan is typically noted on your credit report for up to 7 years.
FILING FOR BANKRUPTCY
Though you may be able to discharge some of your debt, your credit will go so low and your credit reports will show your bankruptcy for up to 10 years, which can make rebuilding your credit quite difficult.
And while bankruptcy is not common, it is the single biggest event that can destroy your credit score – if you had an 800 credit score before bankruptcy, it would not be unusual to see a below-500 credit score after you have finished the filing process.
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