Consumer Proposal and Credit

How a Consumer Proposal Affects Credit

A “Consumer Proposal affects credit” ratings because how you are making your payments has changed. They are not only less than what you agreed to originally, they are now being made through a third party. However, making payments through a structured repayment plan, like a Consumer Proposal or a Debt Management Program, is better than not making your payments and getting further and further behind.

To rebuild a credit rating after having debt troubles, here are some steps you can take:

Apply for a secured credit card with a low limit. Use it wisely, make your payments on time and avoid going over the limit. The creditor will report how you use the card to the credit bureaus. If you choose to use a pre-paid credit card instead, that will not help rebuild credit because nothing is reported to the credit bureaus.

Limit how often you apply for credit. Each inquiry is counted as a “hit” and the more hits you have, the less likely you’ll be able to manage all of your obligations.

Build a Personal Budget to Cover Unexpected or Seasonal Expenses and Pay Bills on Time

Have a realistic budget that lets you save for unexpected and seasonal expenses. This will help you make your bill payments on time every month and avoid relying on credit to make ends meet.

Keep Your Credit Card Balance Low and Pay More Than the Minimum Payment

If you must use a credit card, be sure to limit how much you owe on the card to less than 75% of your available credit limit. Also make sure that you pay more than the minimum each month so that you bring your balance owing down. Don’t make your minimum payment and then charge purchases for that amount, using up what you just paid down. Check out these other tips for how to use credit wisely.

Don’t Pay off Credit Card Debt with Another Credit Card

Robbing Peter to pay Paul will just get you back into debt troubles again. Don’t use one form of credit to pay for another. If you’ve used your line of credit to pay off your credit cards, put your credit cards away until you’ve paid down your credit line. Don’t take a higher car loan or repeatedly refinance your mortgage to pay off high interest debts.

If this has been your habit in the past, contact us to learn how you can use credit wisely and get out of debt and keep it that way.

Contact Us for More Information About Debt Consolidation Options & How a Consumer Proposal Affects Credit

As with many debt consolidation options, filing a Consumer Proposal affects credit. However, finding a way to repay your debt reflects more positively on your credit report than not being able to make your payments.

For more information about how to deal with your debts so that you can rebuild your credit rating, contact us toll free at 1-888-527-8999, email us or chat with us online right now. 

 

Related article: Filing for a Consumer Proposal - Is it the right option for you?

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