Rising prices due to inflation along with rumors of an impending recession have made it harder to manage money these days. A big problem that many Canadians face is high-interest debt, which can make it very difficult for them to progress financially.
According to André Deleo, President/Senior Broker at Morgix, there are steps you can take to help reduce overall debt and interest payments while improving your credit score.
The importance of reducing debt now rather than later
High debt, especially debt that racks up high interest charges, is a problem in several ways. Of course, high debt on a high-interest loan like a credit card costs a lot of money each month in interest charges.
The issues go beyond the cost, however. Andre, who is passionate about helping clients restructure and resolve financial issues, says too much debt can also negatively impact your credit score.
“Actively carry less than 35% of your credit limits, month after month, because an active balance helps optimize your credit score,” explains André. “Plus, keeping your debt-to-equity ratio low ensures that a mortgage renewal application is as strong as possible.”
Getting out of high interest debt
There are several ways to improve your personal debt and credit score. “The first step is to consult a professional. There may be ways to reduce your overall monthly expenses and interest rates by consolidating your debts into a more productive loan,” says André.
He continues, “For example, it might make sense to combine high-interest credit cards into a loan with a lower interest rate. For people who have cash flow problems, a loan with a minimum interest-only payment might be a good idea. Our Morgix team has experience in a wide range of situations and we help each of our clients find a solution that suits their unique situation.
Some factors that may affect your loan options include your debt-to-equity ratio, credit score, repayment history, and home equity.
Advantages of debt consolidation
Of course, reducing debt and saving money on interest charges is always an important goal of debt consolidation, but there can be additional benefits.
“On average, our clients improve their credit between 80 and 150 points from one year to the next after taking out a debt consolidation loan,” explains André. “On top of that, the average monthly savings on the minimum payment is typically between $500 and $1,500 per month.”
Ultimately, working with a top professional broker like Morgix can help you improve your credit score, save money on interest payments, and pay off your debt more easily.
André and his team at Morgix offer homeowners a number of financial services including debt consolidation, refinancing and credit repair. For more information, contact MORGIX License #13399 Onlineemail approvals@morgix.ca or call 1-844-466-7449.
