A consumer proposal is an effective debt relief option that allows you to avoid bankruptcy and pay off a portion of your debt over an extended period.
However, it will have a negative impact on your credit rating, which can make things difficult in future.
Many people that enter into an agreement of this kind wonder what the fastest way to rebuild credit during and after a consumer proposal is.
They often have questions about getting credit during a consumer proposal as well.
This article will answer all of those questions and give you some good advice about building your credit during and after a consumer proposal.
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How Is Borrowing Affected By A Consumer Proposal?
You may be wondering whether you can still borrow money during a consumer proposal, and how your ability to borrow will be affected after you have paid it off.
Bankruptcy and consumer proposals leave a note on your credit report so all lenders can see it.
This disclosure of your consumer proposal stays on your credit report for 3 years after the final balance has been paid, and it does make it more difficult to borrow money.
However, the sooner you pay off the consumer proposal, the sooner that note will be wiped from your credit report.
That’s why paying off the consumer proposal as fast as possible is the best way to start rebuilding your credit score.
You may be considering a secured credit card as a way to rebuild your credit, but this is not a very effective strategy.
Borrowing on a credit card is a risk, and you will only get around $1000, which doesn’t have much of an effect on your credit score.
Car loans are an option during a consumer proposal, but you will be required to pay a large down payment and the interest rate on the loan will not be good.
If possible, it’s best to pay off the consumer proposal first and then take out a car loan.
What Is The Fastest Way To Rebuild Credit During and After A Consumer Proposal?
Borrowing more money is not the best way to rebuild your credit score during and after a consumer proposal.
You will only be able to borrow a small amount on a secured credit score and it won’t be enough to make any meaningful impact on your credit score.
Taking out a car loan is not advisable either because the interest rates will be incredibly high.
Instead, you should focus on these 3 areas:
- Paying your bills on time during and after the consumer proposal;
- Paying off the consumer proposal as quickly as possible;
- Saving as much money as possible (a large down payment is the best way to get car finances with good interest rates).
Following these 3 steps is the fastest way to rebuild credit during and after a consumer proposal.
As your credit score increases, your borrowing power will also increase.
However, it’s important to remember that borrowing got you into this situation in the first place, so be sensible.
If you need more information about rebuilding credit during and after a consumer proposal, or you need advice about other debt relief solutions of any kind, get in touch today.
You can reach us on the phone or fill out an evaluation form and we will get back to you.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal