How to Rebuild Credit After Bankruptcy in Canada and Stay Out of Debt
Rebuilding Credit After Bankruptcy in Canada to Stay Out of Debt
Bankruptcy is a legal solution if you are overburdened by the debt that you have and don’t feel as though you have any other way out.
The problem with bankruptcy is that it negatively affects your creditworthiness, and this can last for years.
This can make it much harder for you to get your credit rating up again, but there are some things that you can do to try and rebuild your credit and regain the trust of your lender.
Need Help Reviewing Your Financial Situation?
Contact a Licensed Trustee for a Free Debt Relief Evaluation
Apply for New Credit where Possible
Opening a new savings account can help you if you have recently been declared bankrupt.
It gives you the chance to start out on the right foot and it can also help you with your long-term planning.
By opening the right accounts, you can then minimise the monthly banking fees that you pay, and you can also generate a much more positive credit report.
Pay your Bills on Time
Erasing debt through bankruptcy won’t stop the bills from coming through.
If you have recently been through bankruptcy then it is now more important than ever for you to pay all of your bills on time.
If you are able to organise and track your regular expenses which include phone bills, your internet and your utilities then you will soon find that it is easy for you to make your obligatory payments on time and you can also build your credit much more efficiently too.
This won’t have an impact on your credit score right away, but it will over time.
Secured Credit Card
It’s estimated that bankruptcy can take up to 240 points off your credit score.
Unfortunately, this also means that it’s unrealistic for you to be approved for a regular unsecured credit card.
If you have filed for bankruptcy recently then you may need to take out a credit card so that you can build your credit.
This is somewhat unrealistic for a lot of people, so it’s a catch-22.
If you want to get around this then it’s helpful to try and apply for a secured credit card.
This means that a weaker credit does not impact your chances of approval.
There are some credit cards out there which are ideal for those who have bad credit but the interest rates on them will be high, so you have to take this into account.
Make Affordable Purchases Only
When you have access to a credit card or a bank account, it can be very tempting for you to fall into some of your old habits.
You may be tempted to split bigger purchases into multiple payments or you may be tempted to use payday loans.
Use this opportunity as a chance for you to have a fresh start, so that you can develop new and responsible habits.
Applying for a New Credit Card
After you have used a secured credit card, and after you have demonstrated new financial habits, the next step would then be for you to begin researching the options that are available to you for an unsecured card.
When you look into the credit options that are available, you should know that some credit card issuers may have strict conditions regarding bankruptcy and that they may require you to be free from bankruptcy for a number of years before they even think about approving you.
You have to make sure that you read the fine print and that you avoid getting possibly denied for an application if possible.
If you are not careful then this will hurt your credit even more.
If you do make the decision to go ahead with an unsecured card then you need to focus on cards which have both low-interest rates and low annual fees.
You also need to make sure that you have flexibility as well as this will stop you from falling into debt again at a later date.
If you need some help applying for a credit card then it’s helpful to do an eligibility check beforehand.
When you do, you will then be able to find out if you can get the card of your choosing before a hard search is done on your report.
If you need some support with your debt then Bankruptcy Canada can help.
We can give you the support you need, and we can also advise you on the best way for you to get the right help for your individual situation.
If you want to find out more about debt relief then please do contact us today.
How to File for Bankruptcy
What is Bankruptcy?
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?