Several factors will determine how quickly you can repair and rebuild credit after your bankruptcy in
Ontario is over and therefore your ability to borrow money in the future.
Lenders determine whether or not you are credit worthy, so to rebuild your credit you must demonstrate that you are able to handle money.
To start, be sure that all of your monthly bills are current and up to date. Don’t be late with rent payments, or payments for hydro, telephone, cable or gas payments.
Next, start saving money. If you have some cash on deposit at a bank, it is more likely that you will be able to borrow money. This also helps if you want to purchase a large item, such as a car, because with a past bankruptcy you will almost certainly require a down payment.
Next, once you have built up some cash for emergencies in the bank, you could consider using some of your savings to get a secured credit card. As an example, if you give the credit card company $1,000 as a security deposit, they will probably give you a Visa card with a $1,000 limit. Your credit card works just like a regular credit card, and even better, it shows up on your credit report, which is an important step to repairing your credit. More information on secured credit cards can be found in the article Rebuild Credit With a Secured Visa Card.
As you continue to save money each month, (and pay off your new credit card in full every month), you could invest your next say $1,000 of savings in an RRSP. With a secured credit card and money already invested in an RRSP, it’s possible that your bank will lend you a further $1.000 to invest in your RRSP. You now have $2,000 in your RRSP, and your tax refund may increase by $800 or more because of your RRSP contribution. You can use your tax refund to repay your RRSP loan!
Now your credit report shows a credit card in good standing, an RRSP loan that you have paid in full, and you have $2,00 in an RRSP. You are well on your way to repairing your credit.
Finally, you continue saving, and once you have another $1,000 or $1,500 you can probably use that money as the down payment on a car.
Of course your ability to borrow will also depend on your monthly income, and the lengthen of time you have lived at your current residence and stayed at the same job, so not moving around excessively will also help.
You can’t repair your credit right away, but if you continue to save money, and follow the steps listed above, you can gradually rebuild your credit after your bankruptcy in Ontario in done.