Let me start by saying, bad things happen to good people. The reasons for a Bankruptcy or Consumer Proposal are not important at this time. It already happened and now it is time to move on and rebuild. We want to help.
A bankruptcy will show up on your credit bureau for 6 years after the date of discharge, 3 years from the date of discharge for consumer proposals or orderly payment of debts (OPD). When it comes to getting a mortgage, credit is one of the most important things a lender is looking for. Specifically, how you have paid your debts in the past. If a bankruptcy is still showing up on your credit bureau, in the lenders eyes, that is derogatory credit regardless of your credit score. So our job is to mitigate the previously bruised credit by helping you rebuild new credit to show you have changed your habits and the lender can now trust you to make your payments on time and not default.
Ideally, it would be most beneficial if you carried some of your debts through your bankruptcy, like a car payment or at least one credit card. This at least gives the lender a history of your payment habits. If that is not the case, you need to show the lender you have changed your habits and can now make your payments on time. Here are some tips to start rebuilding your credit.
START SAVING– you can use your savings account as collateral to take out a small loan that you can pay back on time and rebuild credit.
GET A SECURED CREDIT CARD– It may be hard to get a credit card without having to show some security. The credit card company may ask you to give them money up front and then they will give you a credit card with the same limit. If you make your payments on time and show mature spending habits, you can likely ask for an increase to your credit limit. Once you have one card, it is easier to get another card.
DON’T MISS ANY PAYMENTS– any lender will be closely scrutinizing your credit habits after you have been discharged from bankruptcy. If you miss or are late on any payments, it will not look favorable to a lender as it shows you may not have learned from your bankruptcy and are still likely to default on your debts.
MAKE SURE YOUR CREDIT IS REPORTING– when you get new credit, make sure it is reporting to your credit report accurately. You can pull your own credit report at equifax.ca
Keep in mind, most lenders like to see at least 2 years of new credit reporting before they will even consider giving you a mortgage after a bankruptcy. If you have less than 2 years since you were discharged, there are some mortgage options if you have a larger down-payment available, but they may be associated with higher rates. Lenders guidelines usually treat a bankruptcy and consumer proposal the same.