Rebuilding Your Credit After A Proposal
Your proposal is how you eliminate your debt so you can begin the process of building a new, and better, credit history. Improving your credit score after a consumer proposal involves:
After Filing Bankruptcy In Canada How Long Will It Be On My Credit Report
How long will bankruptcy show on credit reports in Canada for the first time bankrupt after receiving a ?
There are two large credit reporting agencies in Canada: Equifax and Trans Union. Unfortunately neither of them is very forthcoming with regards to their credit reporting practices.
A few years ago you could go to their websites and read a complete description of their reporting procedures. Today, unfortunately, their websites are mostly sales vehicles, so that they can sell you their credit reporting services, and thats a key point to remember: Credit bureaus are profit making businesses: they exist to sell credit information to the lenders and to consumers . They are not impartial arbitrators they are there to earn a profit. Theres nothing wrong with earning a profit, but its important that you understand their perspective.
With that background, based on the most recently available information , Equifaxs policy is to retain the note about your first bankruptcy on their system for six years after the date of discharge.
So, for example, if you in January of year 1, and you were not discharged until October, year 2, the note about your bankruptcy would remain on your credit report for six more years, until the end of October, year 8. Its not the date that your bankruptcy started that matters its the date you were discharged.
In the past Trans Union maintained this information for seven years.
How To Remove Yourself As A Cosigner On A Loan
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When applying for a loan, you may need to have a cosigner or guarantor, depending on your lender or creditor and their terms. A cosigner is somebody who signs an official document, like a loan agreement, with another person. They take equal responsibility for the loan and the cosigner understands that when he signs, he becomes liable for the full amount owed. Having a cosigner increases the probability that the lender or creditor will get their money back in case the person receiving the loan is unable to pay it off.
Cosigners or guarantors are usually required when the person applying for the loan:
- Has a poor or no credit history
- Has a low credit score
- Doesnt have the minimum income required
- Is unemployed
- Is self-employed
- Is a student with an inadequate credit history
Most of these situations represent a high level of risk for the lender. A cosigner helps take away part of the risk and increases the likelihood of approval. The cosigner becomes responsible for any payments that are not made.
What Happens when your Co-signer Declares Bankruptcy? Read this.
Lets say you cosign a friends or family members loan and then after a few months start to regret your decision. Here are a few of the ways you can go about removing yourself as a cosigner.
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Q Who Can Access My Credit Report
A. Provincial and federal laws outline the requirements for what organizations may access your personal credit information. Typically, when you establish a relationship with an organization, they will have you complete an application form that contains a consent statement advising you of how they will use your information. For example, they may inquire with the credit bureau to make a decision about your application and once you have established an account with them, they may report that information to the credit reporting agency and periodically review the status of your account.TransUnion may only provide organizations with access to your information if they have a permissible purpose as defined by provincial consumer reporting legislation. These permissible purposes typically relate to an extension of credit, collection of a debt, employment, tenancy, insurance and the establishment of a business relationship between you and an organization.Finally, you also have the right to access your credit report.
Removing A Judgment From Your Credit Report
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In a Nutshell
Having a judgment on your credit report will lower your credit score, sometimes significantly. In some instances, though, you can get this negative information removed from your credit history. As with any item on your credit report, you have the right to dispute any judgment on your report that you feel has been made in error or has already been resolved. If a creditor has entered a judgment against you, hereâs what youâll need to do to get it removed from your credit report.
If you have one or more unpaid debts that have been turned over to a debt collector or debt collections agency, then you can expect your creditor to sue you for the unpaid debt at some point. This will usually mean bad news for your credit report and your credit score, but in some instances, you can get this negative information removed from your credit history. If a creditor has entered a judgment against you, hereâs what youâll need to do to get it removed from your credit report.
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Most Credit Reports Are Chock Full Of Errors After A Consumer Proposal
Sadly, if you are in or have recently completed a consumer proposal, chances are very high your personal credit history is full of reporting errors. Not just one or two small mistakes, but several serious errors which are likely hurting you quite a lot. These errors paint an overly negative picture of your use of credit and your repayment history, and they drag down your credit score substantially.
Importantly, this is NOT your trustees fault. It affects all trustees equally. And, its not your fault either.
It comes down to the way lenders and credit card issuers and collection agencies report to the credit agencies. The credit agencies are in the business of collecting information and packaging it for sale to the companies that need to assess your creditworthiness. They gather and report the information provided to them and trust it to be accurate.
Even if they wanted to, they dont have the means to fact-check every single piece of data submitted to them. But fortunately, if its not accurate, they will allow you the opportunity to fix mistakes.
IT SHOULD NOT BE THIS WAY!
You knew your personal credit history would take a beating when you filed your consumer proposal but it seemed like a price worth paying for the peace of mind of being able to meet your financial obligations each month. But after youve done the heavy lifting, you shouldnt be penalized for other peoples mistakes or maybe even vindictive filing of false information.
So why does this happen?
Tips For Credit Rebuilding
Ironically, the only way to fix your credit score is to start borrowing money again. If you are in a consumer proposal, think carefully about the purpose of this process, and how to avoid new problems with your credit. Even though it feels good to be offered new credit, or be accepted for a new card, be sure not to overextend your ability to make regular payments. Go slowly. You do not need to borrow large amounts to rebuild your credit. Making all your payments on time is the key. In addition, pay attention to the interest rates and fees charged on credit products you apply for as there are some lenders who may not have your best interests in mind.
Here are some tips for rebuilding your credit.
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Consult With A Professional
There are many independent credit repair agencies in Canada. These agencies use the aforementioned techniques along with a deep knowledge of the Canadian credit system to help you remove negative items from your credit score.
However, the buyer should beware there is no guarantee that your credit repair agency will succeed in removing negative items.
If you dont know where to start when rebuilding your credit, it can be a good idea to partner with a credit agency, but make sure you do your research, and pick a Canadian credit repair agency with a history of good outcomes and great customer feedback.
Q How Do I Receive A Free Copy Of My Transunion Personal Credit Report
A. You can obtain a free copy of your Consumer Disclosure online through our self-service website. to visit our self-service website.You can also request a copy of your Consumer Disclosure by phone or mail, and it will be mailed to you. To review the options for receiving a copy of your Consumer Disclosure, please refer to the Consumer Disclosure section of our website
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Place A Credit Freeze
Contact each credit reporting agency to place a freeze on your credit report. Each agency accepts freeze requests online, by phone, or by postal mail.
Experian
PO Box 26Pittsburgh, PA 15230-0026
Your credit freeze will go into effect the next business day if you place it online or by phone. If you place the freeze by postal mail, it will be in effect three business days after the credit agency receives your request. A credit freeze does not expire. Unless you lift the credit freeze, it stays in effect.
The Meaning Of Credit Reports
On Canadian credit reports , each credit account is assigned a credit score on a scale from R1 to R9. R1 is the best credit rating and R9 is the worst. The R stands for revolving credit accounts that can carry a running balance, on which you are required to pay only a portion each month.
Here are the credit score meanings:
- R1 You pay that credit account on time
- R2 Your payments are 30 days late
- R3 Your payments are 60 days late
- R4 Your payments are 90 days late
- R5 Your payments are 120 days late
- R6
- R7 Typically used for consumer proposals, consolidation orders, or debt management plans
- R8 Shows that a secured creditor has taken steps to realize on their security rarely appears on a credit report as after repossession the creditor typically initiates legal or collection action, which is rated R9
- R9 Typically used when an account is placed for collection or considered un-collectible, or if you are bankrupt R9 can also appear in consumer proposal
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Q How Do I Add A Consumer Statement To My Credit Report
A.If our investigation verifies that the information is reporting correctly, you may add a 100-word explanatory statement in your report to explain your dispute. Exception: 200 words in Saskatchewan. TransUnion requires the request in writing accompanied by a minimum of two pieces of acceptable identification. Together these combined pieces must contain your name, current address, date of birth and signature.This statement is referred to as a consumer statement. This statement should serve as an explanation of item contained in your credit history to companies viewing your credit report. Your statement can be removed at any time at your written request otherwise is maintained on your file for 6 years. All information should be supplied, with your signature to:Correspondence in English :Suite 201 Burlington ON L7N 3N8Correspondence in French :Centre de relations aux Consommateurs TransUnion3115 Chemin Harvester,Suite 201 Burlington ON L7N 3N8
Dont Apply For More Credit
Making numerous requests for credit is often interpreted by lenders as a sign of poor money management and risky financial behaviour. Your credit rating could still take a big hit, even if the lenders reject your requests. Put your plans for more credit on pause for a little while. Patience will be rewarding.
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Pay More Than The Minimum
Paying the minimum every single month is not a good long-term plan. The minimum allows you to make an official payment without getting charged late fees or any other penalties. But it doesnt do much to shrink your debts especially when you factor in high interest rates. Giving more will help you finish the loan repayment much faster, and it will keep your debt amount from getting out of hand.
If you cant afford more than the minimum by the deadline, you can do the following:
- When you have more funds available, make another payment. Every little bit helps.
- When you have more funds available, set it aside so that you do more than the minimum next month.
- Reassess your budget. You may be able to cut costs so that you can put more money towards your repayments.
Tips To Manage Credit Going Forward
If youre successful in removing collection accounts from your Canada credit report, the next step is working on improving your credit. You can do that by:
- Paying all of your bills on time each month.
- Keeping your balances on credit cards low, relative to your card limit.
- Leaving older credit accounts open.
- Using a mix of different types of credit.
- Only applying for new credit when you truly need it.
Raising your credit score after having a collections account removed can take time. But with patience and the adoption of good credit habits like these, you can begin to see your score grow. That can pay off down the road when youre ready to borrow for your next major purchase.
At Birchwood Credit, we understand that perfect credit can sometimes be difficult to achieve when you have a past collections history. We work with buyers from virtually every credit background to help find financing solutions to fit your needs and budget. Browse our extensive inventory online today to find your next vehicle. If youre ready to learn more about what types of financing you qualify for, you can start by completing our online loan application.
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Learn More About Consumer Proposal
We hope our guide to how does a consumer proposal affect my credit rating was helpful. As can be seen, a consumer proposal can be a good solution for many income-earning Canadians struggling to get out of debt. However each situation is different, so why not contact a Licensed Insolvency Trustee to arrange for a no-charge initial consultation to review all of your options including bankruptcy and consumer proposal in Ontario or anywhere else in Canada?
How Can You Check Your Credit Score
You can request a copy of your report by phone, by mail or in person for free, with either Equifax or TransUnion. Many Canadian banks also provide your credit score for free through their websites.
Its recommended that you review your credit report once a year to check for errors. If you find something that is incorrect, contact the credit reporting agency and your financial institution. You have the right to dispute any information on your credit report that you believe is wrong, and you can ask the credit bureaus to correct errors for free. Read more about checking for errors here.
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Mistakes On Credit Reports After Completion Of A Consumer Proposal
Unfortunately, it is not uncommon to find mistakes on your credit report after youve completed the consumer proposal. Its advisable to get the inaccuracies resolved as soon as you can, so your credit report reflects the correct and most updated picture. After all, upon completion of a consumer proposal, youre looking forward to a fresh and optimistic start and rebuilding your credit. Both Equifax and Transunion have processes in place to correct erroneous information on your credit report in Canada.
So be sure to examine your credit reports and check whether creditors are reporting any previously owed figures as fulfilled or still pending. If you find any discrepancies, you can initiate a rectification by submitting a correction request to Equifax or TransUnion . The request must include a completed Credit Investigation Request Form along with any pertaining documents as evidence to substantiate your request.
Dont Rely On Credit As An Income Source
A well-managed credit account can be an important step toward financial responsibility and can be a smart way to establish a healthy credit rating. However, if you routinely max out a credit account or are using it for necessities regularly, chances are you are living beyond your means and setting yourself up for bad credit issues and possibly getting in over your head.
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Q How Do I Add A Potential Fraud Alert To My Credit File
A.If you think you may be a victim of fraud but there has been no reported misuse of your credit or no confirmed misuse of your personal information, you can place a Potential Fraud Alert on your credit file. If, for example, you’ve lost a purse or wallet, placing a Potential Fraud Alert will tell potential lenders that you may be a victim of fraud and provide them with your contact phone number.
- A Potential Fraud Alert can be placed on your credit file.
- An alert can also be placed on your Social Insurance Number .
- A Potential Fraud Alert on your credit file will remain in place for 6 years unless you request to have the alert removed earlier.
- An alert on your Social Insurance Number will remain in place for at least 1 year.
- If fraudulent misuse of your personal or credit information is confirmed, please contact us by phone or in writing to add a Confirmed Fraud Alert to your credit file.
There are three ways you can add a Potential Fraud Alert to your credit file:
- Online: to visit our self-service website. To promote our online Potential Fraud Alert service, sign-up is free for a limited time.
- Over the telephone: call 1-800-663-9980 and select option 3 to use our Interactive Voice Response system to place your alert. Please note that SIN protection is not available through the IVR.
- In writing: Click Here for additional information.