If you've ever been in a situation where you can't pay your bills, you may have considered filing for bankruptcy to get a fresh start. While it's true that this option can give you a clean slate, it's also important to understand that it comes with some long term consequences.
How Long Bankruptcy Stays on Your Credit Report
Declaring bankruptcy will stay on your credit report for up to ten years. In Canada, a bankruptcy stays on your credit report for six to ten years from the date of the initial filing. The timeframe in which it stays on your report depends on the province in which you live. This means that any time you apply for credit, lenders will see that you have filed for bankruptcy.
If you want to learn more about how bankruptcy can affect your financial future, read on to learn more as iCASH, a Canadian-based direct lender, provides some important information about it.
Bankruptcy Reporting: Equifax & TransUnion
Once you've filed for bankruptcy, it will be reported to Canada's two main credit bureaus: Equifax and TransUnion.
The bankruptcy will appear on your credit report history for six to ten years, depending on the province in which you live.
Even after the bankruptcy has been removed from your credit report, lenders will still be able to see that you've filed for bankruptcy if they pull up your report.
What to Do if You're Considering Bankruptcy in Canada
If you're considering bankruptcy, you’ll want to know it will affect your credit score and credit report. First, you’ll want to know how long bankruptcy stays on your credit report in Canada. Canadians who file for bankruptcy will see it on their credit report for six to ten years. This doesn't mean, however, that you won't be able to get a loan during that time.
You may be able to get a loan or other forms of financial assistance as soon as one year after filing for bankruptcy. But, as mentioned, the terms of the loan may not be as favourable as if you had good credit history.
You can always speak to a credit counsellor or bankruptcy trustee to understand all of your options and the potential impacts on your credit report. Before moving forward, you must understand all of the implications of bankruptcy.
How to Improve Credit After Bankruptcy
If you decide to go ahead and file for bankruptcy, there are steps you can take to improve your credit score after bankruptcy to get back on track. Below is a simple checklist you can follow to stay on track:
- Check your credit report regularly to make sure there are no errors.
- Make all of your payments on time - this includes your rent, utilities, cell phone bill, etc.
- Build up your savings so you have a cushion in case of an emergency.
- Use a secured credit card to rebuild your credit.
- Become an authorized user on someone else's credit card. This may help improve your credit score if the account holder has a good payment history. But, it's important to make sure you trust the account holder and that they make their payments on time, as late payments will also show up on your credit report.
- Pay off your debts as quickly as possible.
- Keep balances low on your credit cards.
If you follow the steps above, you should see your credit score improve over time. Be patient and not get discouraged if you don't see a drastic improvement immediately. Improving your credit score after bankruptcy is a marathon, not a sprint. But it is possible if you're dedicated to rebuilding your credit.
How to Get a Copy of Your Credit Report in Canada
You're entitled to a free credit report from each of the major credit reporting agencies in Canada - Equifax, and TransUnion. You can request a copy of your credit report by mail, fax, or online.
If you request your credit report, you'll need to provide some personal information, such as your name, address, date of birth, and SIN. You may also be asked to provide a credit card so that the credit reporting agency can verify your identity.
Once you've provided your information, you'll be able to access your credit report and score basis from the method by which you chose to request it. If you find errors on your credit report, you can dispute them with the credit reporting agency.
What to Do if You Find Errors on Your Credit Report
Disputing errors on your credit report should be done immediately because errors can negatively impact your credit score. If you find an error, contact the credit reporting agency and provide as much information as possible about the error.
The credit reporting agency will then investigate and correct any errors if they find that they're indeed inaccurate. You should also keep in mind that it can take some time for the credit reporting agency to investigate and correct errors, so be patient.
Can You Get a Loan With a Bankruptcy in Canada?
While a bankruptcy will stay on your credit report for some time, that doesn't mean you won't be able to get a loan during that time. You may be able to get a loan as soon as one year after filing for bankruptcy, depending on your financial situation.
Of course, the terms of the loan may not be as favourable as if you had good credit. For example, you may not receive as high of a loan amount as you require, or the repayment terms may be shorter.
At iCASH, bad credit isn't a deciding factor on whether or not you're approved for a loan. We understand that financial difficulties happen to good people, which is why we offer loans for people with bad credit. Even if you've filed for bankruptcy in the past, you may still be eligible for a loan from us. As long as you are not currently bankrupt, we can help you get the cash you need.
We offer loans of up to $1,500 with flexible repayment terms. We understand that financial emergencies happen and we're here to help. We have a quick and easy online application process and we can get you the money you need in as little as two minutes.