10 Steps To Rebuild Your Credit Rating After Bankruptcy

Once you have received your discharge from your bankruptcy, you can follow these steps to start you on the path to a better credit score.

1. Get a copy of your credit report to ensure that your discharge from bankruptcy is reported correctly. To obtain a free copy of your credit report, you will need to contact one of the two credit reporting agencies – Equifax Canada and Trans Union of Canada. We recommend getting a credit report from each organization.

2. Ask a close friend or relative to co-sign a small bank loan. Assuming they have a strong credit history, you will be able to rebuild your credit rating at a reasonable rate of interest. Make sure all of your payments are made on time; otherwise, it will reflect poorly on both you and your co-signer.

3. Apply for a small RRSP or GIC loan. This small loan will allow you to build up retirement savings, rebuild your credit and will reduce the amount of income tax that you have to pay.

4. Apply for a low balance secured credit card.  You will be required to pay a security deposit. Only use the card for purchases that you can pay in full each month. The secured credit card will help you rebuild a positive payment history and ultimately help improve your credit score after completing your bankruptcy or consumer proposal.

5. Get a cell phone on a contract. Your cell phone payment history will reflect on your credit report; make sure to pay the agreed-upon monthly payments on time. After the completion of your bankruptcy or consumer proposal, this new debt contract should help improve your credit score.

6. Paying utility bills on time is essential. While they don’t provide a credit rating, they can have a negative impact if not paid on time or if they get assigned to a collection agency.

7. Avoid NSF and Overdraft Fees. These charges are costly, but they can also raise flags with your financial institution that you may be having difficulties managing your money.

8. Develop a monthly budget plan.  Good money management habits are essential to long-term financial success. By setting short, medium and long-term financial goals, you can plan your spending and avoid costly impulse purchase decisions.

9. Avoid excessive borrowing. Each time you apply for credit, it is recorded on your credit report. Too many of these inquiries are viewed negatively by lenders and will lower your credit score.

10. Start a savings account or Tax Free Savings Account (TFSA). Having money on hand for unexpected expenses, such as a major car repair, will help keep you out of debt. It’s also good to have some funds set aside, so you maintain your monthly bills in the event of a job loss.

Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of major financial stress;

• You won’t be stuck in an assembly line process.

• You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.

• We will review your debt solution options, including filing a consumer proposal or personal bankruptcy.

• We help Canadians with overwhelming debt get fresh financial starts.

Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.

We offer free consultations to review your financial situation and practical debt resolution options. Contact us to discuss your situation over the phone, a video chat, or in-person in Saint John, Moncton, Fredericton, Charlottetown, Dartmouth, or Miramichi.