1. How are you different from other financial services?
We educate the consumer on true credit knowledge, identify and correct all credit report errors, and negotiate all debts within 12 months without the negative impact on your credit report. The financial services industry is a puzzle that is never put together under normal circumstances. You as the consumer generally have pieces of the puzzle accounted for, however more often than not the foundation is missing.
Because an accountant does not study mortgages, a trustee does not study taxes, an eSwitch consultant does no study the credit system, and a financial advisor does not study underwriting guidelines. Each professional can only advise their client based on the field of knowledge studied. The founder of FORVAN Financial Firm Nalish Francis was able to put the puzzle together due to the many positions she held within the financial industry; therefore we are able to offer a complete perspective to our clients.
2. What is the difference between a consumer proposal and credit counseling?
A Consumer Proposal is a formal procedure under the Bankruptcy and Insolvency Act that allows people who owe less than $75,000 - not including their mortgage-to work with a bankruptcy trustee to put together an offer to pay creditors a percentage of what they own. The payments are made over a set schedule, usually about five years. Credit Counseling generally is nonprofit organizations that negotiate consumer's debts over a period not exceeding 5 years while educating clients on budgeting techniques to help manage their finances. Orderly Payment of Debt option governed by the provincial courts to allow a person to pay his debts in accordance with the section under Part 10 of the Bankruptcy and Insolvency Act.
3. How long does it take to repair my credit?
Generally mortgage lenders and auto financing underwriters like to see 6-12months of on time payments when re-establishing credit
Clients can begin to see positive results within 42 days from the date we contact creditors and credit bureaus regarding inaccuracy
4. I am new to the country and do not understand the credit system can you help me establish credit?
Yes we are credit specialist and new immigrants to Canada would benefit substantially from gaining the right knowledge around establishing credit and credit management
5. I have been turned down for loans in the past because I do not have credit, why do I need to have credit in order to be approved for a loan?
Lenders want to know the level of risk associated to lending money to you in order to protect their interests. The only way lenders can know how you manage your finances is through a review of your credit report. When you do not use credit unfortunately the lenders are not able to determine the risk in lending to you and therefore consider you to be in the same category as a consumer who has bad credit.
6. I recently received a Lump sum of money from a settlement and decided to pay off some old debts, however my credit was negatively impacted as a result why?
The credit system is forgiving, unpaid debt automatically drop of your report 6 years after the last "date of activity" which means the last date the creditor received a payment from the consumer. When a consumer decides to pay a debt that has dropped of their report the old trade line reappears on their credit report as account paid; however this trade line reflects negatively on your overall calculation and will remain on your credit report for another 6 years before it drops off again.
7. I don't understand why I have a low credit score when I pay off my entire credit balances?
Consumers such as Truck Drivers and Construction Workers generally have this problem because of the industry that they work in they are usually too busy to effectively manage their finances. However they make an excellent income use their credit cards/line a credits and pay the balance off regularly. The problem is that the credit system calculates the credit score by a formula that requires consumers to pay the debts by the specified due date monthly. If you do not pay your minimum monthly payment on or before the due date your credit will be negatively affected.
8. Why is it that my friend who filed for Bankruptcy 11 months ago was able to get a mortgage and I was not able to refinance my mortgage while under a consumer proposal?
It's important to think like an underwriter, all lenders are really interested in knowing is that the borrower has the ability to pay back the loan on a monthly basis regardless of if they have good or bad credit. Bad credit consumers will pay higher interest rates, however they are still able to get mortgages, the difference in this situation is that when a consumer files for bankruptcy and discharged the lender understands that the borrower now has more available money to make mortgage payments (A Total Debt Service Ratio TDSR and Loan To Value calculations that are taken into account when pre-approving clients for a loan).
Entering into a consumer proposal for no more than 5 years can create a stumbling block when the mortgage comes up for renewal for a few reasons:
i) Where you may have been approved with an A lender initially you will no longer qualify for a mortgage with an A lender due to derogatory credit.
ii) Depending on the reason why you entered a consumer proposal you may no longer fit the TDSR requirements for A, B, or C lenders to qualify
for a mortgage.
iii) You may decide within the 5 years of your proposal to file for Bankruptcy, no lender will put their money at risk to be included in a bankruptcy proceeding.
9. I had excellent credit based on what I was told by most banks (720 Beacon score) and recently decided to close some of my credit accounts and a line a credit that I had for 10 years, to my surprise my credit score was negatively affected why?
Your credit report is a mathematical equation made up of 5 categories in which your credit score is determined. Length of credit history accounts for 15%; when you close old accounts you shortened the length of time active trade lines are on your report which negatively affects your credit.
10. My sister filed for Bankruptcy one week and was able to go out and purchase a fairly new car in her name only the very next week, how is this possible?
There are 4 types of lenders A, B, C and D. Each type of lender has different underwriting guidelines’; however there are lenders who are willing to finance consumers who have filed for bankruptcy. The amount lender is willing to lend is determined by the amount of money the consumer can allocate to a car payment based on the Total Debt Service Ratio TDSR. Consumers who make a great income would qualify for a greater loan amount than those who have a low income. Think like an underwriter the consumer who filed for bankruptcy has more assessable cash to allocate to paying back a loan because all their previous debt has been absolved in the bankruptcy proceedings.