“Going Bankrupt and Rebuilding Credit in Canada” is a series written by Common Cents Mom (Hollie Pollard) who, in her own words, “really had no sense when she was young but she is a fast study and is learning that you can recover from financial mishaps.” Hollie shares what she is learning and doing on her blog Common Cents Mom.
Rebuilding after Bankruptcy
In the first part of this series we talked about the things that can lead to bankruptcy and then we looked at all the alternatives to bankruptcy and then we defined bankruptcy. After everything is said and done you do get a discharge. I can’t wait for that day. The next day the challenge then becomes: What are you going to do with that second chance? The job of rebuilding must begin.
So how does one rebuild after bankruptcy? First you have to remember that the bankruptcy will stay on your credit report for 6 years. So remember rebuilding will be a slow process but it can be done.
Now with work you can rebuild. What will you and I need to do?
First keep your budget and pay all your bills on time. Even at the bank make sure there are no NSF fees (insufficient funds).
Then the easiest way to rebuild is to start with a secured credit card. With a secured card you have to make a deposit sometimes equal to your credit line. Here in Canada you can apply for a Mastercard with Capital One or a Visa with Home Trust. Once you get those cards you will want to make sure you use them and pay them on time. There are usually annual fees with these cards so be prepared for them.
Creditors also look for stability: the longer you are at one job and at one residence the better from the perspective of the lenders. Try for stability.
Now if you are having trouble re-establishing things you might try a car loan or a store credit card but watch for the interest rates. If you do get a store card please do yourself a favor and use it minimally.
Whatever you do you must make it habit to pay your bills on time. If you can’t pay a bill in full make at least the minimum payment.
This is how I plan on rebuilding: paying thing on time and I will apply for a secured card while also preparing for the future with an emergency fund and a savings plan.
This concludes Hollie’s four part series on her story of going bankrupt and how she plans on rebuilding credit going forward. It certainly sounds like she is on the right track and I wish her the best of luck! Thanks Hollie.