Category: Credit Score

Filing a consumer proposal or bankruptcy can feel like a financial reset you never wanted. But many Canadians rebuild strong credit afterward. It takes time and consistent habits, but the path is clear.

How Long the Record Stays

Insolvency records do not stay on your credit report forever. Timelines vary by credit bureau and province, but in general a completed consumer proposal is removed a few years after it is completed, and a first bankruptcy remains for several years after discharge. Check your reports with Equifax and TransUnion to see exactly what is listed and when it should be removed.

Step 1: Get Your Credit Reports

After your proposal is completed or you are discharged from bankruptcy, request your credit reports. Make sure the debts included are shown correctly — usually as “included in proposal” or “included in bankruptcy” with a zero balance. Dispute any errors.

Step 2: Build a Budget That Works

Rebuilding credit starts with not falling behind again. Create a realistic budget that covers essentials, savings and any new credit payments. Your Licensed Insolvency Trustee’s required counselling sessions can help with this.

Step 3: Start an Emergency Fund

Even a small cushion of a few hundred dollars can stop a surprise expense from becoming new debt.

Step 4: Get a Secured Credit Card

A secured credit card, backed by a deposit, is one of the easiest ways to begin rebuilding. Make sure it reports to the credit bureaus. Use it for a small recurring bill and pay the full balance every month.

Step 5: Consider a Credit-Builder Product

Some financial institutions offer small credit-builder loans or savings-secured loans that report your payments to the credit bureaus. Read the fees and terms carefully.

Step 6: Pay Every Bill on Time

Payment history is the most important factor in your score. Automate payments for everything you can, including your phone and utilities where possible.

Step 7: Keep Balances Low

Keep credit card balances well under 30% of your limit. Low utilization helps your score recover faster.

Step 8: Be Patient With New Credit

After 12 to 24 months of on-time payments, you may qualify for an unsecured card or small loan. Apply selectively — too many applications can hurt your score.

Watch Out for Predatory Offers

After insolvency, you may be targeted by high-cost lenders and “credit repair” companies. No one can legally remove accurate information from your credit report. Avoid offers that charge upfront fees or promise instant fixes.

Realistic Timeline

• 0–6 months: check reports, budget, open a secured card.
• 6–12 months: consistent on-time payments; score begins to recover.
• 12–24 months: possible approval for regular credit products.
• After removal of the insolvency record: your score can continue to improve significantly.

The Bottom Line

Rebuilding credit after a consumer proposal or bankruptcy is very achievable. Start small, pay on time, keep balances low, and give it time. Your credit history is built one payment at a time.

This article is for general information only and is not financial advice. Speak with a Licensed Insolvency Trustee or credit counsellor about your situation.

If you want to improve your credit score quickly, start with your credit utilization. It is one of the most important factors in your score, and unlike payment history or the age of your accounts, you can often improve it within a month or two.

What Is Credit Utilization?

Credit utilization is the percentage of your available revolving credit that you are using. Revolving credit includes credit cards and lines of credit.

Formula: total balances ÷ total credit limits × 100

Example

You have two credit cards:

• Card A: $1,500 balance on a $5,000 limit
• Card B: $500 balance on a $5,000 limit

Your overall utilization is $2,000 ÷ $10,000 = 20%. Card A on its own is at 30%, and Card B is at 10%. Scoring models may look at both your overall utilization and each card individually.

What Is a Good Utilization Rate?

A common guideline is to keep utilization below 30%. People with the highest scores often keep it below 10%. Using a little credit and paying it off is generally better than using none at all, because it shows active, responsible use.

Why It Matters So Much

High utilization can signal to lenders that you rely heavily on credit, which increases your risk. Even if you pay in full every month, a high balance reported on your statement date can temporarily lower your score.

How to Lower Your Utilization

1. Pay down balances, starting with cards closest to their limits.
2. Pay before your statement date. Card balances are often reported around the statement date, so paying earlier reduces the balance that shows up on your credit report.
3. Make multiple payments per month to keep balances low throughout the cycle.
4. Ask for a credit limit increase if you manage your account well — just don’t increase your spending.
5. Keep old cards open, since closing them reduces your total available credit.
6. Spread spending across cards instead of maxing out one.

How Quickly Will Your Score Change?

Utilization reflects your most recently reported balances, so improvements can show up after your next statement is reported — often within 30 to 60 days. This makes it one of the fastest ways to raise your score before applying for a loan or mortgage.

Common Myths

• “Carrying a balance helps my score.” False — you don’t need to pay interest to build credit. Paying in full is best.
• “Closing unused cards helps.” Usually false — it can raise your utilization and shorten your history.
• “Instalment loans count toward utilization.” Utilization mainly applies to revolving credit like cards and lines of credit.

The Bottom Line

Keep your balances low compared to your limits, pay before the statement date when you can, and keep older accounts open. These small changes can make a noticeable difference to your credit score.

This article is for general information only and is not financial advice.

Improving your credit score does not require tricks or expensive services. It comes down to a set of consistent habits. Here are ten practical steps you can start today.

1. Pay Every Bill on Time

Payment history is the biggest factor in your score. Even one payment that is 30 or more days late can do noticeable damage. Set up automatic payments for at least the minimum amount on every account, and use calendar reminders as a backup.

2. Lower Your Credit Card Balances

High balances relative to your limits raise your credit utilization ratio. Aim to keep your total balances below 30% of your combined limits — and below 10% if you want to maximize your score.

3. Pay Before Your Statement Date

Your card balance is often reported to the bureaus on or around your statement date. Making a payment a few days before that date can lower the balance that gets reported, even if you pay in full every month anyway.

4. Check Your Credit Reports for Errors

Mistakes happen — accounts that are not yours, payments marked late in error, or debts listed twice. Request your free reports from Equifax and TransUnion and dispute anything inaccurate.

5. Keep Old Accounts Open

The age of your credit history matters. Closing your oldest card can shorten your history and reduce your available credit. If an old card has no annual fee, consider keeping it open and using it occasionally.

6. Limit New Credit Applications

Each application for credit can trigger a hard inquiry. Several in a short time can signal risk to lenders. Apply only for credit you actually need, and research your approval odds first.

7. Ask for a Credit Limit Increase

A higher limit with the same balance lowers your utilization. If you have a good payment record, ask your card issuer whether you qualify — and check whether the request will involve a hard inquiry.

8. Deal With Collections and Past-Due Accounts

If you have accounts in collections, contact the creditor or agency to discuss payment options. Get any agreement in writing, and make sure paid accounts are updated on your credit report.

9. Build Credit if You Have Little History

If your file is thin, consider a secured credit card or a small credit-builder product that reports to the bureaus. Becoming an authorized user on a trusted family member’s well-managed card can also help in some cases.

10. Be Patient and Consistent

Negative information fades over time, and positive history accumulates. Most people see meaningful improvement after six to twelve months of consistent good habits. Avoid companies that promise to “erase” accurate negative information — no one can legally remove correct information from your report.

What to Avoid

• Paying for “credit repair” services that promise quick fixes
• Maxing out cards, even if you plan to pay them off
• Co-signing loans you are not prepared to repay yourself
• Ignoring bills or collection letters

The Bottom Line

Paying on time, keeping balances low, and checking your reports regularly will steadily raise your score. There is no shortcut, but these steps work for almost everyone.

This article is for general information only and is not financial advice.

Your credit report is the record lenders use to decide whether to approve you and at what rate. Errors on that report can cost you money — and they are more common than many people think. The good news: in Canada, you can check your credit report for free and correct mistakes yourself.

Where to Get Your Credit Report

Canada’s two national credit bureaus are Equifax Canada and TransUnion Canada. Both provide free access to your credit report, typically online through their websites, and by mail or phone if you prefer. Because lenders may report to one bureau but not the other, it is wise to check both.

Some banks and personal finance apps also show your credit score for free. These are helpful for tracking trends, but the full report from each bureau shows the detail you need to spot errors.

Checking Your Own Report Does Not Hurt Your Score

Requesting your own report is a soft inquiry. It has no impact on your credit score, so you can check as often as you like.

What Is on Your Credit Report

• Personal information: name, date of birth, current and past addresses, and sometimes employers
• Credit accounts: credit cards, loans, lines of credit, mortgages, and their payment history
• Inquiries: who has checked your credit and when
• Public records and collections: such as bankruptcies, consumer proposals, or debts sent to collection agencies

Common Errors to Look For

1. Accounts you do not recognize (a possible sign of identity theft)
2. Payments incorrectly marked as late
3. Debts listed more than once
4. Accounts shown as open that you closed
5. Old negative items that should have been removed by now
6. Incorrect personal details, such as a wrong address or misspelled name

How to Dispute an Error

1. Gather evidence: statements, payment confirmations, or letters showing the correct information.
2. Contact the credit bureau: both Equifax and TransUnion accept disputes online, by mail, or by phone. Explain the error clearly and include copies of your evidence.
3. Contact the lender as well: the company that reported the information can often correct it directly.
4. Keep records: note the dates, reference numbers, and names of anyone you speak with.
5. Follow up: the bureau will investigate with the lender. If the information is confirmed as wrong, it will be corrected. If not, you can usually add a brief consumer statement to your file explaining your side.

If You Suspect Identity Theft

If you see accounts or inquiries you did not authorize, contact both credit bureaus right away and ask about placing a fraud alert on your file. Contact the affected lenders, report the incident to your local police, and report it to the Canadian Anti-Fraud Centre.

How Often Should You Check?

Checking at least once a year is a good minimum, and more often if you are planning to apply for a mortgage or car loan, or if you are rebuilding your credit.

The Bottom Line

Reviewing your credit report is free, does not affect your score, and can save you from paying higher rates due to someone else’s mistake. Make it part of your yearly financial check-up.

This article is for general information only and is not financial advice.

Your credit score affects whether you are approved for a loan, credit card, apartment, or even some jobs — and what interest rate you pay. Yet many Canadians are not sure how scores are calculated. This guide explains the basics.

What Is a Credit Score?

A credit score is a three-digit number that summarizes how likely you are to repay borrowed money on time. In Canada, scores range from 300 to 900. The higher your score, the lower the risk you appear to lenders.

Who Calculates Your Score?

Canada has two main credit bureaus: Equifax and TransUnion. Lenders report your account information to one or both bureaus, which keep it in your credit report. Scores are calculated from that information using scoring models. Because bureaus may hold slightly different data and use different models, your scores can differ from one source to another.

Approximate Score Ranges

Score	General rating
760–900	Excellent
725–759	Very good
660–724	Good
560–659	Fair
300–559	Poor

These ranges are general guides. Each lender sets its own approval standards.

The Main Factors That Affect Your Score

1. Payment history: whether you pay on time. This is typically the most important factor. Late payments, collections, and bankruptcies have a strong negative effect.
2. Credit utilization: how much of your available credit you are using. Keeping balances below about 30% of your limits is commonly recommended.
3. Length of credit history: how long your accounts have been open. Older accounts help.
4. Types of credit: a healthy mix, such as a credit card plus an instalment loan, can help.
5. New credit inquiries: several hard inquiries in a short period may lower your score temporarily.

Hard vs. Soft Inquiries

A hard inquiry happens when a lender checks your credit because you applied for credit. It can slightly lower your score. A soft inquiry — such as checking your own credit or a pre-approval check — does not affect your score.

How Long Negative Information Stays

Negative items do not stay forever. Late payments and collections generally remain on your report for about six years. A first bankruptcy typically remains for six to seven years after discharge, and a consumer proposal usually remains for a few years after it is completed. Exact timelines vary by bureau and province.

What Does Not Affect Your Score

• Your income or job title
• Your age, marital status, or where you live
• Checking your own credit
• Debit card or cash spending

Why Your Score Matters

A higher score can mean easier approvals, lower interest rates, and larger credit limits. Over the life of a car loan or mortgage, a better score can save you thousands of dollars.

The Bottom Line

Your credit score is a snapshot of how you handle credit. Pay on time, keep balances low, and avoid applying for too much new credit at once — those habits are the foundation of a strong score.

This article is for general information only and is not financial advice.