How to Improve Credit After a Consumer Proposal

A consumer proposal is a Canadian court-approved program through which your outstanding debts are renegotiated with lenders by a third party. Though a consumer proposal will help immediate financial problems by lowering monthly payments and reducing debt, it will hurt your credit score. A consumer proposal will stay on your credit report for three years, but you can begin improving your credit score immediately by removing inaccurate information from your credit history and reestablishing positive credit.

Instructions

1

Check your credit report for inaccurate information. It's especially important to check your credit report after a consumer proposal or bankruptcy to make sure that accounts included in the proposal are marked as paid. A consumer proposal on your credit report obviously doesn't help your score, but having negative information reported twice for the same account will damage your credit even more. You can get a copy of your credit report from Equifax or TransUnion via there websites: www.equifax.ca and www.transunion.ca.

2

Pay bills on time. Credit card issuers and banks are not the only companies who report to credit agencies. Utility, cell phone, and even subscription services can report delinquent account information to credit agencies. Every mark on your credit report either improves or decreases your score, so stay on top of payments even if you don't think they're important.

3

Start rebuilding a positive credit history. You need to show that you're responsibly paying back lenders, but this can be hard if nobody will lend to you. One solution is to apply for a secured credit card. Secured cards allow you to place money in an account tied to the card and use it to purchase items. Since there is no risk to lenders with secured credit cards, you will qualify no matter how poor your credit rating.

4

Apply for an unsecured loan or credit card. Though it's harder to qualify for unsecured credit after a consumer proposal, it's not impossible. Unfortunately, you will be offered less desirable rates and fees due to your credit score. Once approved, you need to use the card or loan to start improving your credit. Just be sure to pay off your balance each month to show lenders that you're financially responsible.

5

Avoid applying for too many cards at once. Many people apply for numerous credit cards or loans after a consumer proposal just to see who will lend to them. This practice will actually lower your credit rating as lenders may think you're overextending yourself financially.

6

Keep your balances low. Once you get a new credit line, make sure that you keep the balance below 50 percent of the credit limit. Lower balances show creditors that you're not in financial trouble and are able to make payments.