Bankruptcy isn't the end of your financial life—it's a fresh start. Follow this proven roadmap to rebuild your credit score and qualify for loans again.
Your Fresh Start Begins Now
Completing a bankruptcy or Consumer Proposal can feel like a weight has been lifted. But many Canadians worry: "Will I ever be able to get credit again?" The answer is yes—and often sooner than you think.
Understanding Your Starting Point
After bankruptcy, your credit score will typically drop to the 400-500 range. A Consumer Proposal will leave you in the 500-600 range. While this is low, it's not permanent. With consistent effort, most people can reach a 650+ score within 18-24 months.
The Credit Rebuilding Timeline
Months 1-3: Foundation Building
- Obtain your free credit reports from Equifax and TransUnion
- Verify that all discharged debts show as "included in bankruptcy" or "included in proposal"
- Dispute any errors immediately
- Open a secured credit card
Months 4-12: Establishing Positive History
- Use your secured credit card for small purchases
- Pay the full balance every month (never carry a balance)
- Keep utilization under 30%
- Set up automatic payments for all bills
Months 13-24: Building Momentum
- Apply for a second secured credit card or small credit builder loan
- Consider a credit builder program through your bank
- Monitor your score monthly (use free services like Borrowell or Credit Karma)
- Maintain perfect payment history
Months 25+: Graduating to Unsecured Credit
- Apply for an unsecured credit card with your bank
- Consider a small personal loan to diversify your credit mix
- Begin planning for major purchases (car, home)
The Secured Credit Card Strategy
A secured credit card is your most powerful tool for rebuilding credit. Here's how to use it effectively:
Best Secured Cards in Canada:
- Home Trust Secured Visa
- Capital One Guaranteed Mastercard
- Neo Secured Card
How to Use It:
- Deposit $500-$1,000 as security
- Use the card for recurring bills (Netflix, phone, gas)
- Pay the full balance every month
- Never use more than 30% of your limit at any time
- After 12-18 months, request a credit limit increase or graduate to unsecured
The Power of Payment History
Payment history accounts for 35% of your credit score—the single largest factor. This means:
- Never miss a payment on anything (credit cards, utilities, phone, rent)
- Set up automatic payments for fixed bills
- Use calendar reminders for variable payments
- Pay at least a few days before the due date
Credit Utilization: The 30% Rule
Credit utilization (the amount you owe vs. your limit) accounts for 30% of your score. The rule is simple: never use more than 30% of your available credit.
Example:
- If your limit is $500, don't charge more than $150 before paying it down
- If your limit is $1,000, keep your balance under $300
Pro Tip: Pay your balance multiple times per month to keep utilization low, even if you're making larger purchases.
When Can You Get a Mortgage?
This is the most common question we hear. The timeline depends on your circumstances:
After Bankruptcy:
- 2 years: Possible with alternative lenders (higher rates)
- 3-4 years: Possible with traditional lenders (if you've rebuilt credit)
- 5+ years: Best rates available
After Consumer Proposal:
- Immediately: Possible with alternative lenders (if you have down payment and income)
- 1-2 years: Possible with traditional lenders
- 3+ years: Best rates available
Common Mistakes to Avoid
Don't:
- Apply for multiple credit cards at once (each application hurts your score)
- Close old accounts (length of credit history matters)
- Co-sign for anyone (you're responsible if they default)
- Use payday loans or high-interest credit
- Miss payments (even one can set you back months)
The Bottom Line
Rebuilding credit after bankruptcy or a Consumer Proposal requires patience and discipline, but it's entirely achievable. Most of our clients are surprised at how quickly their scores improve once they implement these strategies consistently.
Remember: bankruptcy or a Consumer Proposal gave you a fresh start. Don't waste it by falling back into old habits. Use this opportunity to build a stronger financial foundation than you had before.