Life After Bankruptcy

How to rebuild your credit after you’ve been discharged.

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How to Rebuild Credit After Bankruptcy in Canada
Tips to Stay Out of Debt

Here are 8 helpful tips to start rebuilding or fixing your credit score in Canada after you’ve been bankrupt:

  1. Pay Bills on Time
  2. Get a Cell Phone on Contract
  3. Get a Secured Credit Card
  4. Apply for a Small Amount of Credit
  5. Stick to a Monthly Budget
  6. Avoid NSF Fees and Overdraft
  7. Only Charge Your Credit Card With Money You Can Pay Back
  8. Avoid Getting Into Debt Again
Businessman's hands with calculator and checking the financial data

1. Pay Bills on Time
Avoid Bad Credit from Late Payments

Pay all of your bills on time. Don’t underestimate how important it is to pay your regular bills, like hydro, gas, cable, internet, etc. on time every month.

If you find that you’re forgetting to pay sometimes, set up auto-pay through your online banking or put a reminder on your calendar.

If you don’t have enough money when bills are due, put money for your bills into a separate bank account as soon as you get paid. If possible, set this up so that it automatically happens with every pay cheque.

While paying bills on time won’t fix your credit directly, it will signal to lenders that you’re managing your money effectively.

2. Get a Cell Phone on Contract
Companies Report Your Status to Credit Bureaus

Apply for a cell phone on contract. The big companies will report your payment habits to the credit bureaus each month. As you pay your bill in full and on time each month, it shows that you’re managing money effectively.

You don’t need a costly plan for this to help your credit. Paying your bill on a cheap contract every month will still show that you’re using credit responsibly. What’s most important is to pick a plan that fits your needs as well as your budget.

Like all bills, pay your cell phone bill in full and on time every month. Acting responsibly with your payments goes a long way to repair bad credit.

Happy woman checking her phone
Credit cards with lock close up

3. Check Out How a Secured Credit Card Can Help
Helpful Charge Card Strategy

Apply for a secured credit card. Companies report usage on these cards to the credit bureaus. Paying your secured credit card bill on time will have the same positive effect on your credit as paying a normal credit card bill.

To get a secured credit card, you’ll need to save up about $500 for the security deposit so that the credit card company can hold that money for up to 2 years. They use this money in case you don’t make your payments and they need to close the card.

Use your card for one or two small, planned purchases each month, wait for the bill to arrive, and then pay it in full and on time. This will help to rebuild credit and clean up your credit history.

4. Limit How Often You Apply
Wait for at Least 6 Months Between Applications

Don’t apply for too much new credit. Every time you do, there will be a “hit” against your credit report. This means that when lenders check your report to see if they can give you credit, that check is recorded on your report.

If a lender sees that you apply for credit often, they’ll be less likely to give you more credit. For example, you don’t want a bunch of applications for credit cards you don’t need stopping you from getting a car loan or mortgage that you do need.

If your credit application is declined once or twice, wait at least 6 months before you apply again. The longer you wait, the better. This is just one factor in how your credit score is calculated or checked in Canada.

Credit score document paper sheet

Need expert help?

Looking to get back on track?

Get started today by making an appointment to speak with one of our Credit Counsellors. We’re happy to answer your questions and help you. All of our appointments are free, confidential and non-judgmental.
List of expenses with a pen close up

5. Live Within a Realistic Budget
Save for Unexpected Expenses

Have a monthly budget that lets you live within your means. Look at how much money you have coming in every month and how much money on average you spend. If you’re spending more money than you make, then look at what exactly you’re spending on and where you can cut costs. Alternatively, you can look for ways to make more money. The key is to balance your budget so that you don’t rely on credit to make ends meet.

You will definitely need to set some savings aside for unexpected expenses. They tend to happen when we least want them to! Make regular deposits to your savings account and manage your normal monthly expenses carefully. More than anything else, sticking to a good budget is the best way to keep financially healthy.

6. Use Your Bank Account Responsibly
Avoid Account Overdraft and NSF Fees

Use your bank account responsibly and consistently. Overdrawing your account or writing NSF cheques is a sign of financial difficulty. It will cause problems with the bank account you’re using and could cause problems for future credit applications.

The easiest way to have quick access to your bank balance is to set up your online banking. Most banks and credit unions also have apps for your smartphone. Log on to check where you stand before making purchases. It can even help to have separate bank accounts for routine expenses and savings if you’re having trouble staying organized. 

Man's hand using calculator checking his cheque book
Hand woman calculating expenses on a calculator with bills and a computer

7. Avoid Credit You Can’t Afford
Never Take Out Loans You Can’t Repay

Avoid using payday loans to make ends meet. They won’t help improve your credit rating.

If you find that your pay cheques aren’t enough to make it to the end of the month, consider other options to help avoid ending up in financial difficulty again. If you feel like you’re out of options, contact us and we’ll be happy to help you find solutions that will work for you.

After going through bankruptcy, you know the consequences of having debts you can’t repay build up. Keep it from happening again by staying away from credit and loans you know you can’t afford.

8. Avoid Getting Into Debt Again
Make Smart Financial Choices

Part of rebuilding your credit after bankruptcy means learning new money habits. The tips on this page have hopefully helped you. However, just as rebuilding your credit takes time, getting used to and practising new money habits does too.

If you notice that you’re starting to get behind again, don’t wait until you’re maxed out before you get help. Whether you need to talk to a family member, friend, or get expert help, the sooner you take that step, the easier it will be to get back on track.


Hand putting banknote into pig money-box

How to Get More Help – Deal with Debts and Rebuild Credit After Bankruptcy

If you’re thinking of declaring bankruptcy and aren’t sure if it’s the right option for you, please contact us for more help. We’ll be happy to answer your questions, debunk bankruptcy myths and provide you with information about how it can affect your credit. If you’ve already been discharged, we can help you find ways to rebuild and restore your credit after bankruptcy. We offer comprehensive credit counselling services and can help. We’re available by phone at 1-888-527-8999, by email or through our online chat.

Find out how to get debt relief

Get the help you need. Find the right option that will work for your specific set of circumstances. Instead of endlessly looking through debt consolidation company reviews, let one of our experienced counsellors help you. If we can't fully help you, we'll refer you to an organization we trust that can or help you put together an action plan so you can get started on your next steps. Feel free to give us a call or chat with us online. We're here to help.

Get the clarity you need.

Speak with a non-profit credit counsellor.

If you’re overwhelmed by your current financial circumstances or have difficulty maintaining a monthly budget, we can help you by providing personalized tips for paying off credit card debt. We’ll review your financial situation with you and explore all the different ways you can get rid of your debt. There are even debt relief and debt repayment programs that might help. 

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