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:

Equifax

Equifax removes a consumer proposal from your report 3 years after you’ve paid off all of the debts included in the proposal.

Trans Union

Trans Union removes a consumer proposal from your file 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 Credit 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 you can rebuild your credit.

For example, if you file your consumer proposal on November 2019 and it’s paid in full by November 2022, a record of your proposal stays on your file until November 2025. Thereafter, you can do the following to rebuild your status:

• • 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.

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