Rebuilding your credit is achievable. It just takes time and commitment. By making sure you make your payments on time and in full each month you can repair your credit score and improve your credit report.
How long it takes to repair bad credit depends on what needs to be repaired. If you were one month late paying your hydro bill, once you get caught up and continue paying on time, your credit score goes back to normal fairly quickly. If you are consistently late the damage is much worse. You should try to ensure your payments do not get past 90 days overdue. Credit companies view this as the magic number — payments overdue 90 days or more will remain on your credit report much longer. If you filed for insolvency the impact on your credit report will remain for several years:
- if you declare personal bankruptcy, the bankruptcy will remain on your credit report for six years after the date of discharge in most jurisdictions.
- a consumer proposal will remain on your credit report for 3 years after you complete your proposal.
Credit Repair Tips
After a bankruptcy, to repair your credit we suggest the following:
- Be sure and keep all your payments current. This includes payments like your hydro bill, phone bill and cell phone bill. Being on time is the best way to re-establish your credit rating.
- Begin saving money for down payments for when you are able to borrow again. Over time, your credit will gradually improve. In fact, many people are able to finance a car or even a house a year or two after their bankruptcy ends, if they have a sufficient down payment.
- Diversify your credit by applying for a secured credit card. Again it is important that you show that you are able to make your payments on time and in full on this account. Just because it is secured does not mean that you can be late on payments.
One thing we do not recommend are payday or short term style ‘repair your credit’ loans. These are very expensive and are not good ways to rebuild your credit.
The speed at which you repair your credit is largely up to you. But it will take time. If you are wondering how your credit will be impacted by any debt relief option, contact one of our experts today. They will be able to advise you on how your credit will be affect by any debt relief alternative you choose.