After your consumer proposal ends, it’s important to take steps to rebuild your credit.
We meet with people every day who are just beginning to discover that you can rebuild your credit after you complete a consumer proposal. In fact, your proposal may be an ending to one chapter of your life but it’s also the beginning of a new debt-free one.
When we help people with their debt we want them to know that there is life after debt. If you have too much debt to repay it might be time to rewind and reset. A consumer proposal kickstarts the process of working towards a future where you can have access to manageable credit again.
Rebuilding your credit will take a little bit of work, but it’s not impossible. You can even plan for home ownership in your future if that is your goal.
Secured Credit Cards
A credit card that requires a security deposit will help you create positive credit bureau activity. Take time to save up a deposit before you apply for an account and have the security deposit funds available. A secured credit card is easier to obtain if your credit score isn’t great. Lenders will hold onto your deposit while you manage the new card without any difficulty, eventually your deposit is returned to you. Some people will even apply while still actively in a consumer proposal because they require a traditional credit card (not a visa debit or prepaid) for employment or travel.
During the first couple of months of the year, visit your bank and ask about RRSP loans. Invest in your retirement savings plan and get a receipt to help increase your income tax refund (or reduce income tax debt). An RRSP loan can improve your overall financial profile by investing in your bank. You invest a manageable amount and repay the loan over the course of the year. Your bank representative should be able to lead you in the right direction. If you’ve never owned a home before and have set a goal to buy one after your proposal ends, an RRSP can also help you save up a down payment. You can borrow interest-free from your RRSP if it’s your first time buying a home. Funds borrowed in this program must be paid back within a set timeframe to avoid paying income tax.
Security & Consistency
Job security and consistent income will also have an impact on your future loan or mortgage applications. If you have a stable job and keep it for many years this can help in the long run when shopping for a mortgage lender. Lenders like to see security and consistency from a financial perspective. For this reason self-employed applicants may face additional steps with lenders. Another way to demonstrate security and consistency is to start saving money at your bank. Savings, whether for retirement or otherwise, always look great on an application for credit.
Manage Your Credit Report After A Consumer Proposal
Finally, monitor your credit report by ordering your free disclosure report annually. Make corrections if you see mistakes and be sure to check both Equifax and Transunion. Keep in mind that some service providers like phone companies may report late activity to the bureau. Any negative reporting can impact your score. Approximately 3 years after you receive your certificate of full performance for completing your proposal, be sure to pull both of your credit bureau reports. At this time the consumer proposal and all debt included in it should be removed from your record.
If you think it might be time for a fresh start please contact us to schedule a free consultation. We offer booking by telephone 310-4321 or online. Life after a consumer proposal isn’t going to be as challenging as you may think. You owe it to yourself to find out more.