The three types of people with bad credit: which one are you? | Refresh Financial

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The three types of people with bad credit: which one are you?

Bad credit is something that can happen to almost anyone, no matter their current financial situation. If you’re reading this and thinking “well bad credit isn’t ever going to be a problem for me”, you might be wrong.

At Refresh, we’ve identified three main types of people with bad credit - bad credit by blindside, bad credit by lack of knowledge, and bad credit by bad habits. These three types of people cover the majority of those who find themselves with a less-than desirable credit score.

Bad credit by blindside

People who fall into this category were probably once financially stable and able to pay their bills on time, and they didn’t have to worry about not getting approval for a loan or credit card. Now, however, they’re struggling with bad credit. If this sounds like you, it’s likely that somewhere along the way, life threw you a curveball that disrupted everything. Maybe it was a costly divorce, a lengthy illness, a job loss, or business venture that went south. You may even have had to declare bankruptcy as a result. Whatever the reason for your credit going downhill, it was a blindside. This was not part of your life plan! But you’re not alone - in fact, in the case of an emergency, 35% of Canadians would take out a small loan or pay for it on their credit card - which, if you’re not able to repay, quickly leads to negative reporting on your credit score.

Bad credit can happen to anyone - even good people - and it’s not always as a result of low income. There are many people who earn a healthy living, but have overextended themselves, and not prepared for the future. They are only one or two pay-cheques away from having to resort to credit cards to make repayments on other loans. Those who are blindsided by bad credit are mostly aware of the importance of a good credit score, and having emergency savings, but just can’t seem to get either of them on track at the moment.

Despite these unfortunate circumstances, the ones who are successful at rebuilding their financial future aren’t resentful. They pick themselves up, dust themselves off, and invest the time and effort to become more financially stable.

Credit tips:

  • Plan for unexpected expenses. Put a little aside each month, whatever you can afford so that you have at least a small nest-egg of savings. There’s a saying “Make hay while the sun shines” - well, when you have income, save some each month to be better prepared for one of those nasty blindsides so it won't lead to bad credit.
  • If you can, pay off  more than the minimum amount owed, and bring your debts down - it’s one of the fastest way to a better credit score because it lowers your  credit usage percentage - making up 30% of your credit score.

Bad credit from a lack of knowledge

Credit is a tricky subject, and it’s unfortunately not something that is taught in school. If you’ve recently discovered that you have bad credit, but you’re not really sure how or why, you’re not alone - almost half of Canadians (42%) learned about credit the hard way – by ‘making a mistake’.

Have you recently closed a credit card account? That can bring down your credit score. Did you go through a breakup and learn your ex had bills in your name that you haven’t paid. That too can lead to bad credit. Have you made a few late payments but thought nothing of it? Yes, that’s right, it’s impacting your bad credit! Without understanding why your credit score is so important, or not knowing what can impact your credit score, you don’t know if your current financial practices are helping, or harming, your credit score.

Credit tips:

  • If you’re just learning about the importance of your credit score, but you’re willing to do whatever it takes to start building it, educate yourself about money, credit, finances etc. Determine exactly what has led to your poor credit score. Once you know what you did wrong, you’re more informed not to make the same mistakes again.
  • Get started on a set-it-and-forget-it credit building program. It’s one of the easiest ways to get your credit score climbing and you don’t even have to think about it

Bad credit from bad habits

Do you make purchases based on wants rather than needs? Do you buy items on your credit card knowing you don’t have, and may never have, the finances to pay it off? Do you miss bill payments and have them wind up in collections? You, my friend, have bad habits that are probably putting your credit score in a downward spiral. If you carry on this way, it’s likely you will never get yourself out of your financial hole. If you need credit, you will either be declined every time you apply, or you will only be offered it at the highest interest rates.

If this sounds, like you, there is hope. If you recognize this behaviour in yourself, but want to change, it is possible...with some hard work and discipline. However, unless you can own up to your bad spending habits, and admit that things need to change, you won't be successful long-term at building credit.

Credit tip:

Change your bad habits/adopt new, good habits:

Read more good money habits to adopt here!

The credit rebuilding journey

Whatever the reason for your bad credit, take responsibility for the problem. In fact, don’t view it as a problem at all, view it as a challenge. It’s understandable that some people will be resentful of the credit-building process, looking to blame others for putting them in this situation, but the reality is, this is where you are now. Tackle the challenge head on, and view this next phase of your life as an exciting journey rather than an arduous chore. With some self-discipline and sacrifice, you’ll soon be on the path to credit recovery.


Refresh financial offers custom credit building solutions to help you build your credit score FAST.

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    What Canadians are saying about Refresh

    I would like to thank Refresh Financial for helping me get out of a bad spot. I never thought it was possible and almost gave up on things and then I saw Refresh Financial and and gave it a try. At first I was unsure of things but to see my credit score now makes me a believer in this program.

    – Aaron A

    “It hasn’t even been a year yet, possibly only 6-7 months, and my TransUnion score has gone up over 100 points. That was only the tip of the iceberg as recently I was able to get a consolidation loan from my bank that allowed me to move forward and make things easier for me. Talk about second chances!”

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    “I am now in a position where I am able to obtain credit (just bought a brand-new car and refinanced my mortgage for a fantastic rate) and it took little to no time at all. I would 100% recommend Refresh to anyone looking to rebuild credit with as little hassle as possible.”

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    Refresh helped me regain credit following a nasty divorce, which left me with a very poor rating. They were able to remarkably help me go from a 480 to a 600 score, in just over a year. Thank you Refresh!”

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    I have watched my credit score jump since being with Refresh and I have already recommended it to friends and family. Thank you for helping me build my credit faster for my future and my children’s future :)”

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    At first I was skeptical because I wasn’t getting funds upfront and had to make payments when I really needed the money. I’ve been in the program a year now and have noticed my credit has improved drastically!”

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    I have been a client of Refresh Financial for approximately 3 years. Since being a client they have improved my credit immensely. Definitely recommend this company to anybody that needs help re-establishing credit.”

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    “I recommend this program to anyone having credit issues. At the end of the agreement, your money is refunded to you. There were times I found myself short on cash and Refresh, with permission, used a portion of my money to clear up my arrears.”

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    “I would like to thank Refresh Financial for their professionalism, great customer service and for helping get back to a better financial situation. I have always been treated with the utmost respect.”

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    Refresh Financial is an amazing program to help people get back on their feet. I was rock bottom with nowhere to turn. My credit was beyond poor. I would recommend them to anyone. If I can do it surely anyone else can.”

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    “Great company to deal with for rebuilding credit, very simple process to get started. Good service if you ever have questions.”

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    This business truly cares about its clients. The customer service is always quick to return calls or emails. Their online portal functions very well so as a customer you are always updated as you progress with your loan.

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    “Refresh Financial has made us more aware of how to take care of our financial situation and be more responsible, and making payments on time is rewarding in the end for credit. Thank You sincerely.”

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    This company has been nothing but fantastic. They have gone above and beyond to help me. This program has given me the relief and peace of mind I need. I would certainly go back to them and give them names of people who could use this.”

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    The financial services products are excellent for new immigrants, low-income earners and small business owners. Loans, savings and credit building all in one solution is a perfect fit to help with financial goals and stability.”

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    “After successfully going through a credit rebuilding loan, I was able to use my built-up equity to purchase a newer vehicle and I have since been approved through a financial institution for a loan.”

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    “I made some poor credit choices when I turned 18 and have always had this lingering thought of how am I ever going to better my score. Since being with Refresh I have realized that I took the right step towards bettering my future.”

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    “Thank you Refresh, and my relationship manager for giving me the tools for a better score with a secured card and two credit builder loans. I feel absolutely confident I’m on a better path to financial success. I am happy to be a long term client.”

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    I’m so excited I’ve joined refresh! I’ve already seen a huge increase on my credit after the first month! The staff are a delight and make this so easy to understand. I strongly recommend Refresh Financial even if you have good credit this will give you a boost and you’re saving money with the reverse loan!”

    – Wayne B