Applying for Credit during a Consumer Proposal

  1. Home
  2.  » 
  3. Consumer Proposal
  4.  » Applying for Credit during a Consumer Proposal
A Consumer Proposal is a legally binding choice to forgive the debt, in which you give back a portion of what you owe to your creditors without paying any interest. Only Licensed Insolvency Trustees (LITs) can administer Consumer Proposals, and they conduct any negotiations involving you and your creditors. The final agreed amount has to be paid back over a period as long as five years. Also, the creditors cannot proceed with phone calls, threats, and other legal actions as soon as you file a Consumer Proposal.

Does a Consumer Proposal Affect Your Credit Reports?

A Consumer Proposal affects your credit rating and credit reports. Credit scores are divided into various categories: Excellent, Very Good, Good, Fair, and Poor. Elements like hefty debt loads, maxed-out accounts, and irregular repayments lead to poor credit scores. If you have low credit scores, lenders can charge you high-interest rates when applying for credit. The lenders can also ask for collateral or a co-signer and even reject the credit application if you have a low credit score. A consumer proposal’s maximum duration affects your credit report is six years, and the minimum duration is three years. But the good news is that any impact on your credit report is temporary and can be rectified through a suitable financial routine and time.

Can I get a Credit card during a Consumer Proposal?

In today’s world, credit cards are unavoidable companions in one’s life. Credit cards are needed for both online and offline transactions these days. You can apply and get approval for some types of credit immediately after filing and working on a Consumer Proposal. A secured credit card is the key to getting a credit card during a consumer proposal.

Secured Credit Card

A secured credit card is similar to a standard credit card that we use in our daily lives. Unlike an ordinary credit card, a secured credit card relies on cash deposits added from your end. A secured credit card uses the funds from your bank accounts, like a debit card. Being an essential tool for your credit rebuilding, the significant difference between a debit card and a secured credit card is that a secured credit card is reported to the credit bureau. A secured credit card lets you make the essential purchases you need anytime. Maintaining any credit cards with a zero balance during a consumer proposal is also possible, but a fresh start is required.

Attending the credit counselling sessions before applying for a secured credit card will be best, as these sessions will teach you to manage your credits with a secured credit card. Want to have a credit counselling session? Contact Dana-MacRae, the Licensed Insolvency Trustee, at 1-800-665-9965

How do I receive a Secured Credit Card?

You must apply through various available lenders to get secured credit with a consumer proposal. There are multiple options for secured credit cards, each with various interest rates, fees, and rewards. Furthermore, a Licensed Insolvency Trustee will be able to advise you on applying for the best-secured credit card that can tackle your financial problems.

Rebuilding your credit with a Secured Credit Card

Rebuilding your credit is not a synonym that happens overnight. The credit bureaus notice that you use credit responsibly whenever you carry out a transaction or pay your bills on time. As the payments are a part of your credit report, paying on time, paying more than the required amount, and managing your balance wisely will affect your credit score. Thus, secured credit cards will pave the way to improve your credit rating.

What is the problem with taking an Unsecured Credit Card during a Consumer Proposal?

It is a fact that a Consumer Proposal takes some years to complete. You will sometimes be tempted to take an unsecured credit card or a mortgage during this period. But, it is not a sensible option to take on additional payments if you are, during a consumer proposal, taking an unsecured credit card. It is well and good if you can wait until the consumer proposal is complete. After it’s done, you get time to gradually rebuild your credit rating using a secured credit card. Thus, with a little bit of patience, you can lessen your chances of credit application rejection and high-interest rates leading you to have an unsecured credit card.

Got more questions about applying for credit during a consumer proposal? Contact Dana MacRae – Licensed Insolvency Trustee, for expert advice.  

× How can I help you?