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Tips to Rebuild Credit After a Consumer Proposal
Keep Track of Your Credit ReportAs soon as your consumer proposal is finalized, you must begin monitoring your credit report immediately. Make sure that no consumer proposal creditors are registered as active collection contractors. This is a common blunder made by people after consumer proposal proceedings, and it can have serious consequences, as it signals to potential new creditors that the debt has not been paid off and is still being pursued for collection – even though the debt has been settled, and the consumer is working to rebuild their credit. You should notify Remolino & Associates immediately if you discover an inaccuracy on your credit report; this mistake could be preventing you from reestablishing your credit history. It is possible to dispute information on your credit report by following a set procedure.
Pay Your Bills on TimeIf you’ve been extending a loan or a line of credit, pay the money back on time each month. Long-term credit improvement comes from establishing and maintaining responsible financial practices, and this is the best way to avoid having to file for consumer proposals again in the future.
Get a Secured Credit CardSigning up for a secured credit card is one of the simplest ways to restore credit and get a creditor who is most likely to approve you even after a consumer proposal. Since the amount you deposit determines your credit limit, obtaining a secured credit card has a low entrance barrier. Similar to an unsecured credit card, you make monthly payments on your secured card after charging purchases to it. The issuer of a secured credit card will use the deposit you make to cover any outstanding balances or missed payments. One advantage of a secured credit card is that your payment history can be shared directly with credit reporting agencies. If you keep this up for a long period of time, you should be able to upgrade to a standard unsecured credit card.
Contribute to a Registered Retirement Savings PlanPut your money in a Registered Retirement Savings Plan (RRSP) when you have enough savings. An RRSP loan is available if you have a secured credit card and are already saving money. This loan will not only help your credit, but you will also get a tax refund for investing in it, so you won’t lose out. Having an RRSP shows a bank that you want to invest for the future, so opening one will only benefit your credit score.
Utilize a Credit-Building ProgramBuilding credit via a loan or program is also possible – the goal of a credit builder loan is to improve one’s credit score over time, as opposed to the goal of a standard loan, which is to obtain a large sum of money and repay it. A credit builder loan entails the establishment of a savings account by the lender, the funding of which is tied to the reporting of payment history, to credit bureaus. Making these monthly payments on schedule throughout the loan period will help you establish a solid credit history when the time comes. Also, you get to keep the contributions you made, so that sum will add up to a healthy savings balance.
Create a Budgeting PlanSet up a budget to help you see where your money is going and how much discretionary income you have each month. Keeping track of your spending and sticking to a budget every month takes discipline and consistency, but it ensures you don’t overextend yourself and can control your spending sufficiently to avoid rebuilding your credit again.
Establish Good Credit HabitsSome of the stages above already emphasize what are regarded to be excellent credit practices. But, to properly restore your credit, you must be able to combine them all. The habits include:
- Managing your debt-to-income ratio, which should be around 30%
- Find out your credit rating
- Help keep your money safe from fraud and theft of your identity
- Not using all of your available credit on your credit cards and other loans
- Put money into a fund for emergencies
- Check your credit report often
- Making payments on time
- Pay off your debts before taking on more