Bad credit or bankruptcy? Here are some tips to help you in 2016

There is a lot of hearsay on how to restore credit , as a mortgage broker I can tell you exactly the standards that financial institutions look for when granting a mortgage following a bankruptcy or a consumer proposal ( for the purposes of the text I will always mention bankruptcy, but everything is valid for both situations).

First you should know that financial institutions when applying for a mortgage loan do not make a difference between bankruptcy and the proposal to consumers, the credit restoration requirements are the same.

You have to understand what credit is.

Credit is actually a snapshot at a given point in time that allows financial institutions to judge your credit habits to make their decision on whether to approve or deny a loan application. Following a bankruptcy your image will be tarnished so it is essential to restore it, here are some tips.

First when you are released ask your trustee for a letter of discharge with proof of the debts that have been paid in the bankruptcy then contact Equifax AND Transunion to send them (too much faith I have seen trustees not doing this part of the job and despite it being listed on your credit bureau that your bankruptcy is discharged if the arrears are still active your credit will never go back up)

Thereafter you must have 2 individual credit cards (the joint cards do not give you anything on your credit even if you show that it is you who paid for it) and each must have a history of 24 months. Be aware that when you apply for the card, the date of the application is listed on the credit bureau and it is this that will be taken into consideration and not the activation, so do not try to obtain a card just before the bankruptcy as this will be considered old pre-bankruptcy credit and will not count towards restoring credit. Here are my suggestions for a card to obtain following a bankruptcy, there are several others:

CapitalOne Guaranteed Approval Card

TD Secured Credit Card suggest going to this one, because it is a major company card and they are recognized by all financial institutions, store cards like Sears, Canadian Tire etc… are not considered by all financial institutions . It should be noted that a financial institution that lost in your bankruptcy will be very reluctant to lend you in the future, some will even refuse you automatically. Thereafter it is essential never to be even a day late on your new cards because in this case it will be more difficult to obtain a mortgage or even impossible.

Obviously, I cannot guarantee that you will obtain a mortgage even though you have had your 2 cards for 2 years, because there are a host of other variables that affect the decision: your job, your savings, the geographical location of ownership, etc.

It is therefore important to pay close attention to your credit file, it is your management image and it is on this that financial institutions base their decisions.