How can I rebuild my credit after my bankruptcy in Newfoundland is done?

Several factors will determine how quickly you rebuild credit after your bankruptcy in Newfoundland is done and, in turn, your ability to borrow money.

To begin, if you are currently an undischarged bankrupt, it will be close to impossible to get a loan. However, if you have been discharged from bankruptcy, a lender could possibly consider your application. It will be more difficult to borrow if you’re a discharged bankrupt than if you were never bankrupt before.

Lenders will also want to look at how long you’ve lived at your current address, your job history, your monthly income, and whether you have security for the loan. They may also require a co-signor.

The following are some suggestions for repairing your credit after bankruptcy.

First, save money! While you were bankrupt you made a contribution to your bankruptcy estate by paying the trustee each month. Now that you are used to living without that money, start putting that money in a separate bank savings account each month.

Next, once you have built up some cash in the bank for emergencies, you could consider using some of your savings to get a secured credit card. For example, if you give the credit card company $1,000 as a security deposit, they will probably give you a Visa card with a $1,000 limit. Your credit card works just like a regular credit card, and even shows up on your credit report! This is a vital step to repairing your credit. More information on secured credit cards can be found here: http://www.moneyproblems.ca/SecuredVisa.htm

Third, as you continue to save money each month, (and pay off your new credit card in full every month), you could invest your next say $700 of savings in an RRSP. With a secured credit card, and money already invested in an RRSP, it is possible that your bank will lend you a further $500 to invest in your RRSP. You now have $1,200 in your RRSP, and your tax refund may increase by $500 because of your RRSP contribution. You can use your tax refund to repay your RRSP loan!

Now your credit report shows a credit card in good standing, an RRSP loan that you have paid in full, and you have $1,200 in an RRSP. You are on your way to repairing your credit.

Finally, if you continue saving, once you have another $1,000 or $1,500 you can probably use that money as the down payment on a car.

You can’t repair your credit right away, but if you continue to save money, and follow the steps listed above, you can gradually rebuild your credit after your bankruptcy in Newfoundland in done.