How can I repair my credit after my bankruptcy? After your bankruptcy is completed, credit repair in Canada can be achieved most quickly if you follow this six step plan:
- Ensure your bankruptcy is paid off in the shortest period of time. While in bankruptcy do not apply for any new loans. I would also make sure you pay all your bills on time to ensure there is nothing negative such as collections or defaults on your credit report
- Open a savings account. It is a simple fact of life in here: The banks like to lend money to people who dont need it, not to people who urgently require cash. To borrow again, you need to prove that you are no longer a high risk, and the best way to do that is to show that you have some savings. One way to achieve this is to continue to make the payments you were making to the trustee but now put it in that savings account
- Order a copy of your credit report. Go to Equifax, and Trans Union the two largest credit bureaus in Canada, and get a copy of your credit report. Check it for errors. If you find any, such as debts appearing that were included in your bankruptcy, notify the credit bureau immediately.
- Get a secured credit card. Start rebuilding your credit with a secured credit card. You use your savings to place a deposit with the bank, or Credit Card Company. They give you a credit card with a similar credit limit. It shows up on your credit report as a normal credit card, and now you have a credit card for use when required.
- Invest in an RRSP plan. Use more of your savings to put money in an RRSP. If you invest $1,000 in an RRSP, the bank will probably be willing to lend you another $1,000 to contribute to your RRSP. That $2,000 you contribute will generate a refund at tax time that will be almost enough to pay off your loan. Your credit report now shows a paid off loan, which looks great on your credit report, and you have $2,000 invested in an RRSP.
- Keep saving. You will soon have enough for a down payment on a car, and if you save long enough, the down payment on a house. These are the two easiest loans to apply for and re-establish your credit as they are collateral loans.