10 Steps To Rebuild Your Credit Rating After Bankruptcy
Once you have been discharged from your bankruptcy there are some steps you can follow to put you on the path to a healthy credit rating.
1. Get a copy of your credit report to make sure that your bankruptcy has been properly recorded as discharged. 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, this will allow you 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 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 put down a deposit. Only use the card for purchases that you can pay in full each month. This will help you rebuild a positive payment history and ultimately help improve your credit score.
5. Get a cell phone on contract. Your cell phone payment history will reflect on your credit report so making the agreed upon monthly payments should help improve your credit score.
6. Paying utility bills on time is important. 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 not only costly but they also can raise flags with your financial institution that you may be having difficulties managing your money
8. Develop a monthly budget plan. Good management habits are the key to 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. 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.
For a free consultation over the phone or in person in Saint John, Moncton, Fredericton or Charlottetown, please contact us. Powell Associates Ltd. is a licensed trustee in bankruptcy focused on providing debt settlement, proposal and bankruptcy solutions for individuals and businesses.