How to Rebuild Credit After Bankruptcy in Canada

How to Rebuild Credit After Bankruptcy in Canada

Posted on June 16, 2022

Bankruptcy is a route of last resort for many Canadians. A way to get out from under crippling debt and start anew. Where bankruptcy was once the end for borrowing, things have changed a lot. Before you think about another car loan, you first need to think about how to rebuild credit after bankruptcy happens.

That’s what today’s post is all about. Our  car loans team share 5 ways to help you rebuild credit after bankruptcy.

Open a new bank account

We believe in starting over and opening a new basic bank account is part of that. It doesn’t have to offer lots of features or be fancy. We just want basic banking, the ability to make automatic payments and accept your salary.

Use one of the national banks or your local bank if you prefer. Keep it simple and go with what you’re comfortable with.

Set up automatic payments for all bills

We want to get into the habit of paying all bills on time while also building a positive payment history. Automatic payments make that easy. As long as there is money in the account, all your bills can be paid on time, all the time.

Set up automatic payments for all your bills and major outgoings from your new bank account. If you can set the payment date, set it for the day after you get paid. That way, all your obligations will be taken care of before anything gets spent.

Get a credit card

If your bank offers you a credit card, take it. If you need to get a secured card, get one. We’re not looking at getting you back into debt here. Instead, we want you to use your credit card regularly and pay it off in full each month.

This will help rebuild credit by paying the minimum monthly payments automatically. It also helps your credit mix.

Plan to settle the credit card in full each month to avoid having to pay interest. That way, you get to use the card almost free.

Set strict budgets

Budgeting is a key skill in managing money. We recommend setting a household budget so you know how much money you have to spare each month. Then you know how much you need to spend or save to live within your means.

While we want to rebuild credit, we want to use it sensibly. That may mean spending less, going without occasionally and watching how you use money.

Once you’re in the habit of living within your means, you’ll find yourself relaxing into it and enjoying the idea of being debt free!

Be patient

Rebuilding from bankruptcy will take time. At least 18-24 months after proceedings are complete.

Once you have a credit card and are using it sensibly, you could get another and do the same. If you need a car, after 6 months or so, you could try a bad credit car loan.

Whatever you do, whatever you borrow, make sure you can afford it before you commit. It’s in everyone’s interest that you recover fully!

When you’re ready for that car loan, contact our team. We have lots of experience with bad credit car loans and people with credit situations.

We will use all our skill and experience to deliver the lowest possible Mount Hope auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.

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