How can I rebuild my credit after my Ontario bankruptcy is over?

Several factors will determine how quickly you rebuild credit after your bankruptcy in Ontario is finsihed and therefore your ability to borrow money in the future.

If you are still bankrupt, it will be almost impossible to get a loan (except for perhaps a very high interest car loan, which we generally do not recommend). However, if you have been discharged from bankruptcy, a lender may consider your application, although it will be more difficult to borrow than if you were never bankrupt. Lenders will also look at how long you have lived at your current address, your job history, your monthly income, and whether you have any security for the loan. They may want a co-signor.

Here are some suggestions for repairing your credit after your bankruptcy in Ontario.

First, save money. While you were bankrupt you were making a contribution to your bankruptcy estate, by paying the trustee each month. Since you are now used to living without that money, start putting that money in a separate bank savings account each month.

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.

Third, 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.

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.