Rebuild Your Credit Rating

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Rebuild your credit rating

If you have undergone bankruptcy or consumer proposal, you will need to consider how to rebuild your credit rating so that it does not continue to negatively impact your credit long-term.

When you file for bankruptcy or consumer proposal, the Office of the Superintendent of Bankruptcy (OSB) notifies the credit bureau. When you declare bankruptcy for the first time, the information will be kept on your credit report for 6 years where multiple bankruptcies will be kept on your credit report for 14 years.

How Long Negative Credit Information Can Be Reported

There are limits for how long negative information can be reported on your credit rating. Please see the below list and contact us if you have any questions.

Late Payments

Collection Accounts
Tax Liens

Completed Proposal

6 years from when the payment was late
6 years from the date of delinquency on the original debt (leading up to collection)
6 years from the date of charge-off
6 years after they are paid
6 years from the date entered by the court
3 years from the date it was completed

How to Rebuild Credit

Rebuilding your credit is a crucial step for getting back on your feet and getting back to normal again. Your bankruptcy will stay on your credit report for a 6-year term after discharge, whereas a consumer proposal will stay on your report for a 3 year period following the completion.

Although your credit report will reflect your discharged bankruptcy or completed consumer proposal, it does not prevent you from obtaining credit. When deciding if they will lend you money (and if so, how much), creditors will look at your ability to repay the debt and take into account your income, debt to income ratio and collateral. After this step is complete, the creditor will use your credit report to review your payment history. The more time that passes between the discharge date or the completed proposal, the better the likelihood of getting approved for credit.

Contact our office for more detailed information about this process and your situation.

Credit Rebuilding Tips

You can easily start to rebuild your credit by consistently paying your bills on time and by setting aside money each paycheck to start to build your savings again. Although many of my clients find themselves nervous to use credit again after filing for bankruptcy or consumer proposal, credit is essential to rebuilding your credit score and can be done safely and with caution.

Positive Credit Information.

Things like paying your bills on time and maintaining low balances can help improve your credit score. Ideally, you don’t want to spend more than 75% of your available credit on an individual credit card in order to keep your score positive.

Contact our office for more detailed information about this process and your situation.

Avoid Applying for New Credit.

Unless you have a genuine need for a new account, applying for multiple credit cards can hurt your credit score. Lenders see this as a sign that you need to have several different credit accounts due to financial issues or that you are overextending your ability to pay the credit back.

Pay Attention to Small Details

Although it is important to work on larger issues like judgements and charge-offs, the specific personal information on your credit report is almost equally important. Be sure that your name is not misspelled and that your address is correct – this will help prevent your credit information from getting mixed up with someone else’s.

Contact our office for more detailed information about this process and your situation.

Beware of Credit Reporting Double Jeopardy

When a collection account is unpaid, it might be sold from one credit agency to another which means that the number of collections accounts and the amount of debt you owe could be inflated.

Be More Mindful

With a negative credit score, one late payment is all it takes to result in a big drop in your credit score. Make sure all bills are paid on time by setting up auto pay or by setting yourself a calendar reminder that it’s time to pay a bill.

Contact our office for more detailed information about this process and your situation.

Use a Secure Credit Card

If you are able to use a secure credit card that is reported to the two credit reporting agencies (Equifax and Trans Union), it will help you establish a new, positive credit reference. Some cards only report to one credit agency so be sure to do you research when finding the right card for you.

Dispute Credit Report Mistakes ASAP

We recommend reviewing your credit report once per year so that you can catch any wrong or inaccurate information. Rather than filing an online dispute, we recommend sending a letter to the credit reporting agency and the lender who has given them the wrong information. You will need to do this with each credit reporting agency since they do not share information with one another.

Review Your Credit Score Monthly

This is something that you can quickly do each month and it will let you monitor your progress and make goals for the coming months. Credit reports and scores are generated when they’re requested which means that as soon as negative information is removed (or positive information is reported), your scores can change. Equifax has a fee-based services that will help you do this monthly if you need some extra help.
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Help and Advice Rebuilding Your Credit
After Bankruptcy or a Consumer Proposal.

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