Canadians generally maintain high and healthy credit ratings. The average credit rating in Canada is 672, which most credit bureaus consider to be good. Most Canadians fall within the broad range of 650 to 725. The average score in 2021 was slightly lower, at 667. Average scores tend to rise in times of prosperity and low unemployment, and can fall where unemployment and inflation rise and as we enter recessions. As we enter a bearish environment where rates rise, economic growth starts to slow, and unemployment increases, it is likely that average credit scores will begin to decline again. Dependence on lines of credit, credit cards, and other loan products has been increasing given that food and consumer goods costs have been on a steady climb for some time. COVID-19 didn’t help. Bad credit has been on the up, with some tough outcomes for those unfortunate enough to see their scores decline. A bad credit score means no access to credit for a home purchase, a car loan, education resources, and liquidity to start a business.
An answer to bad credit is to pay down your debts, but this will likely be a slow tedious process. A prospective recession that many believe is on the way could make the process of paying down debt ever harder if unemployment rates rise and job losses kick in. Higher prices for goods aren’t helping. A faster and more efficient way of improving a credit score and making big debt loads more manageable is a private debt consolidation loan with Tembo. A Tembo debt consolidation loan can combine a line of credit, a credit card (or cards), or a bank loan into one liability. Instead of dealing with multiple payments and statements you deal with Tembo. Your debt products are relieved, and you save a good deal of money from the interest you’re now no longer paying to big banking institutions. Interest rates in Ontario and Canada are going up. The latest rate on a 5 year variable mortgage at TD is 5.20%. Servicing costs for credit cards and lines of credit are rising given that the banks are adjusting their prime rates up given the tightening environment. Debt servicing cost savings are a big win and an advantage in a difficult economic environment with higher interest rates.
A debt consolidation loan turns several payments into one. This streamlines and simplifies the debt servicing and payment process. Naturally, a private Tembo debt consolidation loan won’t magically erase debt – habits and priorities need to adjust, but simplifying your payments and clearing your private loan products will help take pressure off your credit score. The best use of a private debt consolidation loan from Tembo is to clear liabilities with the very highest levels of interest (that may or may not be rising given the tightening environment). If you relied on payday high interest loans for whatever reason through the worst phases of the pandemic, for example, a Tembo loan would be a great option to end any egregious or complex payday loan payments and fees. At the end of the day, the best outcome of a Tembo loan is the peace of mind knowing that all of your debt is now cleared and centralized into one product with Tembo which means one pool to pay off and one set of payments.