The first thing on most people’s minds when they complete a bankruptcy or a consumer proposal is: “How can I re-build my credit?”
Sometimes people think to improve their credit by taking out loans and then paying them back. This does build credit, however, when your credit is bad, the people willing to give you loans are often people you shouldn’t deal with. It is easy to end up with a high interest loan, slip up on the payments and then get right back into the mess you were trying to get out of.
Plan out a strategy for re-establishing credit in a positive way!
Before getting started, request a copy of your credit report and fix any mistakes. This way you can insure you are starting fresh. Next, look at ways to build credit, which are lower risk. For example:
A Secured Credit Card – This will work like a normal credit card, but requires a security deposit. A bank is willing to give customers with lower credit secured credit cards, since it is lower risk.
RRSP or GIC Loan – In this case you can take out a loan, but instead of spending the money, invest in in an RRSP or locked in GIC, so that you are still building savings. If anything happens and you can’t pay the loan, it is still possible to cash in the investments to pay it off.
Cell phones- This is something a lot of people don’t think about, but your cell phone also reports as credit as long as it isn’t prepaid, so keep up on your monthly payments.
Steer clear of companies promising to fix your credit for a fee and stick to well-known major financial institutions.
