Will My Credit Be Affected By A Consumer Proposal?

Will A Consumer Proposal Affect My Credit?

A consumer proposal will affect your credit. A record of your consumer proposal will be on your Equifax and Trans Union files file from the day you file your proposal until it’s paid in full and a further 3 years thereafter.  More specifically, both Equifax and Trans Union remove a consumer proposal for your credit report either:

3 years after you’ve paid off all of the debts included in the proposal, or
6 years after you sign the proposal (whichever is sooner)

Rebuilding Your Credit Score After A Consumer Proposal

Although you have up to 60 months pay your consumer proposal in full, you have the option of paying it off faster if you are able to. The more quickly you pay off your proposal, the more quickly it’ll be removed from your credit history.

For example, if you file your consumer proposal on November 2023 and it’s paid in full by November 2024, a record of your proposal stays on your credit history until November 2027.

Also, you can start rebuilding credit score immediately after your creditors approve your consumer proposal, which generally takes 45 days after the day you file your proposal. The best method for accomplishing this is described in this video:

  • If your goal is to eventually apply for a mortgage to purchase a home, lenders generally use a 2/2/2 rule: 2 years discharged, 2 new accounts, $2,000 minimum limits with good repayment history. The easiest way to start is to obtain a secured credit card. Because your credit utilization rate is a major factor in your score, try to get card with a moderately higher limit (e.g. $2,000) – using a card with too low a limit will be of limited use in rebuilding your score.
  • Use your credit card consistently – use it for everyday purchases and pay off the balance in full at the end of the billing cycle. By doing this, you’re reestablishing your payment history. Doing this over a long period of time will gradually increase your credit score since the length of your credit history contributes to your credit score.

Our Promise To You

If you want to work with a Trustee who will give you confidence and peace of mind that your consumer proposal is being dealt with in a professional manner, look no further.

Contact Fong and Partners Inc., one of the 3 Best Rated Trustees in the Greater Toronto Area.

Phone: 416-260-3264

Email:   help@startingovertoronto.com

 

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