Consumer Proposal Credit Rating
How Does a Consumer Proposal Affect My Credit Rating?
When you make a consumer proposal your credit rating will be adjusted to R7 or R9.
Your credit rating will stay at R7 until your proposal is completed; the sooner you complete your proposal the sooner you can start rebuilding your credit.
How long does a consumer proposal stay on my credit report is a common concern for many individuals.
Equifax and Transunion are the main credit reporting bureaus in Canada.
A consumer proposal will have an impact on your credit rating and credit score, although not as severe an impact as going bankrupt.
In Canada we have a credit rating scale of 1 to 9, with R1 being the best credit rating and R9 the worst credit rating.
The credit rating scale in Canada is as follows:
R1 – Your debts are paid on time;
R2 – Payments are 30 days late;
R3 – Payments are 60 days late;
R4 – Payments are 90 days late;
R5 – Payments are 120 days late;
R6 – R6 is generally not used;
R7 – Debtor has entered a Consumer proposal or other debt repayment management plan;
R8 – Shows a repossession action has been taken;
R9 – Shows the debtor is bankrupt, or your debts have been sent for collection.
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Although a record of your proposal will remain on your credit report for 3 years after your proposal is completed, you can begin rebuilding your credit as soon as your proposal has been completed.
We suggest that you contact one of our local Licensed Consumer Proposal Administrators to learn how a proposal will impact your credit rating and to discuss possible other options that could be available to help you get out of debt.
Once the administrator hears about your specific financial issues and debt problems they can suggest the best options for you.
Should I Worry?
While having your credit rating adjusted to R7 through a proposal is a disadvantage of making a proposal in some cases, in most cases if you are considering a consumer proposal your credit is probably already less than perfect.
Paying your bills on time and having a good payment history and keeping your credit cards under your credit limit will help build your score over time.
If you cannot qualify for a debt consolidation loan, are worried about wage garnishments, or have fallen behind on your payments then you should consider speaking with a professional who can help you explore all of your options through a consumer proposal.
By dealing with your debt through a consumer proposal you have a chance for a fresh financial start.
You can begin to rebuild your credit after a proposal and you will even be able to qualify for a mortgage in as little as 2 years following the successful completion of your consumer proposal.
Filing a consumer proposal also gives you protection from collection calls or your wages being garnished so the stress and worry will stop as well when you make a proposal.
While a consumer proposal will impact your credit rating, it is also a chance to start over fresh!
While every financial situation is different, a consumer proposal is a great solution to debt problems for many Canadians struggling with debt.