The credit report is sent to the collection agencies each month reporting everyone who has filed for bankruptcy. This government controls the reporting of bankruptcies not the trustee.
Credit Ratings & Bankruptcy
Bankruptcy on your Credit Report
Credit ratings in Ontario are normally recorded on a scale of 1 to 9 with a perfect credit rating being R1. Bankruptcies are reported as R9, for six (6) years plus the 9 months prior to the bankruptcy discharge.
The effect of a bankruptcy fades over time as the positive factors in your life improve and you no longer have any debts.
Most people realize the poor credit rating that bankruptcy brings, but for most their credit was already bad so the credit rating can only improve with time.
Consumer Proposals & Credit
Where a consumer proposal has been filed, the proposal will drop the credit rating to the lowest level.
The reporting agencies, take the consumer proposal off your credit score after three years have past from your last payment.
With this rating credit will be difficult to obtain, but most people within proposal understand this and taking an active role in rebuilding their credit.
While considering a proposal, a reduced term or paying off the debt sooner is better than later for your credit score.
Lenders and Credit
Businesses, banks and credit card companies want you to have credit so you can buy their products.
Credit institutions look at the borrower not just from their credit rating, but what is the ability and belief that the borrower will repay the loan.
In assessing credit and loans creditors will look at not only your credit rating but your relationship to:
- are you working
- what is your ability to repay the loan
- what is your background e.g. living situation, bills, family
- credit rating
The credit rating is just one factor lenders use to establish credit.
My credit rating was horrible but after the bankruptcy discharge I gradually worked to improve it, I got a secure credit card, then a small loan and now 4 years later I’m seeing the credit report improve each year. Best thing I did was call YanchDey. Thanks again, Danny Demers Scarborough.
After the bankruptcy is discharged, or the consumer proposal is finished you can start rebuilding your credit by:
- ensuring that all bills are paid on time
- make a monthly deposit into a savings account, for emergencies and down payments
- obtain a secured credit card with a minimal balance up to 500 dollars
Rebuilding your credit is an ongoing process. You start slow and carefully learning to use credit wisely while increasing your credit rating over time.