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How to recover from bankruptcy

How to recover from bankruptcy

How to recover from bankruptcy

Canadians who have recently come out of bankruptcy have some unique challenges in front of them. We are going to show you the best way forward so you can get back on your feet financially and start living your best life in the process.

Step 1: Establishing a baseline

Bankruptcy can happen to anyone at any time; the average Canadian is up to his/her/their eyeballs in consumer debt.

In fact, the average Canadian household is just $200 away from financial hardship!

Whatever the reason for going bankrupt, you have completed the requirements under the law and have a fresh start.

Now you need to start rebuilding your credit; the challenge is no one is willing to give you credit with a bankruptcy on your credit report and no established tradelines.

This is a chicken and egg scenario, but there are tools available that can help you rebuild your credit.

Koho offers a credit rebuilding loan; this facility costs $7 per month for six months but so long as you pay Koho on time, they will report these trades to Equifax, which will start you on your path to rebuilding your credit.

The facility offered by Koho is classified as an installment loan, but you need some revolving credit on your credit report to see your score improve.

You can apply for a secured credit card from Capital One, they are going to charge you $57 per year for the card, plus you need to deposit funds into an account.

This deposit is your actual credit limit, so deposit a minimum of $500, so you have something significant inside your credit report.

Strategies to follow to speed up your credit rebuilding

If you lived in the U.S.A., you could piggyback on the credit of someone else, which would help you rebuild your credit score even faster; sadly, that option is not available in Canada.

What you can do is apply for additional secured credit cards like those being offered by HomeTrust.

Much like the Capital One secured card, you will need to deposit funds to act as surety towards your credit limit.

Timeline to see an improvement in your credit score

Time is the biggest influencer on credit reports; the longer you have an active, positive track record, the higher your credit score.

After the bankruptcy, your score could be in the 400s, but once you have a few active tradelines, your score will shoot up to the 600s in a few months.

While you are improving your credit score, you should look for ways to maximize your savings.

With the cost of living going up in Canada, it can be tempting to fall back into bad financial habits like living off your credit cards.

By having a budget and sticking to it, you are less likely to overspend, which will prevent you from facing bankruptcy again, so why not start working on rebuilding your credit now?

Contact Unique Chrysler for help, advice and competitive car finance and leasing.

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