7 simple ways you can battle debt and bad credit

The unexpected can sometimes happen, but that doesn't mean you should be in everyone's bad books. Here's some simple ways to get back in the black.

Personal loans are typically cheaper than credit cards, with the most competitive charge being less than seven percent. Unlike credit cards, the repayment term and interest rate are fixed at the outset.

A bank or trust company won't automatically give you the best deal. Try looking around online and to other resources before settling on where to take out your loan.

• This is the cheapest long-term credit you can get, and many people use it to consolidate more expensive debts such as a credit or store card.
• It isn't always a good idea, because you may take more than 25 years to pay off your mortgage, which means you end up paying more in the long run.

If you seem likely to exceed your bank account funds and go into overdraft, always warn your bank. If you don't, you could pay twice as much interest on your overdraft as you would on a personal loan.

Your financial record, including details of all borrowings, arrears and defaults, is kept on file at two credit reference agencies — Equifax and TransUnion Canada. Banks and trust companies tap into their records when deciding whether to lend you money.

You, too, can check out your rating. It's a good idea to do so every few years. A gym membership, gone unpaid and long since forgotten, may be listed. Even if you clear up the matter with the gym, the information may remain on your record. The onus is on you to have the agency remove it.

Where a bad credit rating can cost you dearly, having no credit rating at all can be just as detrimental. You are most likely to be granted a loan if you have a proven record of paying back credit and debt responsibly.

• A growing number of reputable lenders will give you a mortgage, even if you have financial worries. You will pay slightly more than the most competitive rates, but it may not be as expensive as you think.
• Consult an experienced mortgage broker to help you find the best deal.
• Non-standard mortgages, as they are known, also allow you to repair your battered credit rating. After a year or two of regular payments, you can re-mortgage to a lower rate from a different lender.

With some money-savvy moves, you could get out of the red and start to enjoy the lifestyle you want.