How to get relief from debt and improve your credit

According to the government of Canada website, in 2019 over 70% of Canadians found themselves in debt. The most common type of debt reported was a mortgage on a primary residence but many others reported having outstanding credit card, vehicle or student loan debt as well.

When debt is incurred, you are essentially borrowing money from your future income and therefore reducing your future standard of living. By minimizing the amount of debt that you owe, you will be better able to save for the future and will ensure that you are able to provide all of the necessities for both yourself and your family.

What can I do to get out of debt?


While getting out of debt may seem impossible, with a little bit of organization, some determination and some extra work, getting out of debt is something that anyone can accomplish. Some proven methods to help reduce your debt include:

Know what you owe

Often people don’t have a good understanding of how much money they are spending a month. Make a list of all of your debts, what the monthly minimum payments are, what your other expenses are and how much money you are earning a month. Compiling this data will give you a better understanding of where you are overspending and ways that you can save.

Create a budget

Once you have determined exactly what you owe and what your spending habits are, create a monthly budget and follow it. Determine at the start of each month where you will need to allocate your income and don’t stray from this plan.

You care about your money don’t you? Once you start your budgeting journey you’ll realize just how important every dollar is and how fast those numbers can add up. Here’s our Complete Guide to Saving Money (and making a little more)!

Pay off more than your minimum monthly payments

If you want to get ahead and really start paying down your debt, then you will have to pay off more than the minimum amount required each month. This will reduce your debt faster and also lessen the amount that you have to pay in interest each month.

Reduce your spending habits

Looking for ways to reduce the amount of money that you spend each month is an excellent way to minimize the amount of debt that you are accumulating and it will allow you to have extra money left over at the end of the month to put towards debt repayment.

Earn extra income

Increasing the amount of money that you earn each month can go a long way towards paying down your debt. Working overtime hours, obtaining an extra part-time job or putting your skills to work as a freelancer are all excellent ways to increase your earnings.

Whether you are seeking to make a passive income or invest in MLM, you can find a way to generate an income quickly or gradually. Here’s a small sampling of ways you can make money in 2021!

Look for a lower interest rate

Reducing the amount of interest that you have to pay on credit cards and loans will allow you to pay off more of your debt, reducing the amount that you owe much faster. Sometimes, by contacting your credit card company, you may be able to negotiate a lower interest rate. You can also look into opening a balance transfer card which will offer a very low interest rate for a limited time and will allow you to transfer your existing balance to the new card, reaping the benefits of the low rate and giving you the opportunity to pay off your debt faster.

What is a credit score?


A credit score is a three-digit number that is calculated by credit bureaus and lenders that represents how much debt you have, how well you manage your credit and if you are considered high or low risk to other lenders based on your history.

Credit scores are usually broken down into these three categories:

  • Poor – Below 660
  • Good – 660 to 724
  • Very Good – 725 to 759
  • Excellent – 760 and above

There are many different factors that may affect your credit score such as:

  • How long you have had credit
  • How often you miss making payments on your credit
  • How close you are to your credit limit
  • How much debt you have
  • How many credit cards you have applied for
  • If you have ever been contacted by a collection agency
  • If you have every filed for bankruptcy

How can I improve my credit score?


Making steps to improve your credit score will help you when applying for future loans. Your credit score can be improved by minimizing your debt, making all of your payments on time and not applying for any new credit cards or loans.

Here are a number of simple best practices you can employ to improve your credit score over time! If you follow these tips, you’ll be well on your way to a stable financial future!

Frequently asked questions about how to get relief from debt and improve your credit


Can my credit report show if I am a victim of identity theft?

Yes. It is highly recommended that you check your credit report once a year to check for any signs of fraud or identity theft. This will show if anyone has used your identity to attempt to open up a new credit card or to apply for a loan.

Will checking my credit rating negatively influence my score?

No. Your credit score will not be impacted if you check it. Checking your credit score regularly will allow you to keep track of your debt and will help to prevent identity theft and fraud. When you apply for a loan or a credit card, the financing company will need to check your credit rating and each of these third-party checks may negatively impact your score.

Is bankruptcy a good solution to erase my debt?

In some situations, yes. Filing for bankruptcy will erase all of your debts and it could be a good choice for someone who has looked into all other options and is unable to repay their debts utilizing another method. Bankruptcy can have long-term implications and may affect things like your credit score and possibly your job. Bankruptcy should only be used as a last resort and after you have received full counsel from a knowledgeable financial planner or bankruptcy specialist.

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Amanda Leach

Fifteen years can be a long time to work in one industry, but not when you are doing something that you love. Amanda has enjoyed the freedom of working as a freelance writer for the majority of her career. She has successfully combined her passion and skill for writing while still enjoying a life filled with travel, learning and exciting new experiences. While she loves exploring all different types of writing, her PhD in Consumer Psychology has made her a sought after writer for marketing, business and technology fields. Amanda is a regular contributor to Smarter Loans.