Credit After Bankruptcy

One common misconception about bankruptcy is that you will be unable to get credit for 6-7 years. The fact is, you do not have to wait 6-7 years before you can get credit again. The 6-7 years is simply referring to the length of time the information relating to your bankruptcy will stay on your credit report. Most people are able to re-establish credit within a year or two after they have finished their bankruptcy.

Here are some tips for re-establishing your credit after bankruptcy:

1. First and foremost you must have a sufficient and stable source of income. If you are having trouble paying for the basics then put off applying for credit until your income improves and your finances are healthier.
2. Talk to an advisor at your banking institution and explain you have been through a bankruptcy and that you have been discharged. Ask for advice on what their institution would like to see in order for them to be willing to loan money to you.
3. Save. Your bank will see that you have the discipline to consistently set money aside. Secondly, you can invest your savings in a GIC to use as a form of collateral. Then, you can apply for a small loan or secured credit card. Your bank may be more willing to loan money to you if you can provide an asset as security.
4. Apply for a secured credit card. It’s important not to confuse a secured credit card with a pre-paid credit card. Do your research to ensure that the card you are applying for actually reports to the credit bureaus, otherwise it will not help you re-establish your credit rating. Credit cards are usually the most expensive form of debt so use the card but pay the balance in full and on time. One credit card with a low limit is enough. Having 3, 4, or 5 credit cards - even if they have a zero balance, will impact your ability to borrow for things like a car or a house in the future.
5. Make all payments on time - your rent, your cell phone, utilities, car loan, .... everything!
6. Do not overdraw your bank account or write cheques that go NSF.

Just like when you first started your credit life, it will take a little pre-planning, time and saving for you to get credit again but it IS possible.


By:  Brenda D.  Owens, Trustee in Bankruptcy

Brenda works for James R. Yanch, Trustee in Bankruptcy
215 Simcoe St. N.
Oshawa, Ontario
L1G 4T1
905-721-7506
www.jamesryanch.com