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  • Writer's pictureJen Bedard

Has Bankruptcy Ruined your Chances of Buying a House?

Updated: Dec 6, 2019

The short answer is NO. Home-ownership is often a challenge for most of us but is particularly difficult if you have declared bankruptcy in recent years. The ways to repair your credit in Ontario may be different from those in other parts of Canada, but it is possible, and I will tell you how. I will focus on tips that are specific to where I live – the Niagara Region in Ontario. Some of these tips will apply across the country but it is always a good idea to verify the facts regardless of your location.

Contrary to popular belief, when you file for bankruptcy or a consumer proposal, you are actually trying to get a fresh start, it does not mean you’re irresponsible or bad with money, a lot of the time, it means you’ve fallen on difficult times or trusted your finances to the wrong person, or made some rash decisions (haven’t we all?). Now that you’ve taken the next step, you’re officially debt free and your cash-flow is going to improve. The downside is that you are not going to qualify for a loan right away. That’s okay, because it gives you some time to build up your credit rating so that you can get that loan to buy a house when you are ready.

1 – Stay Current on Your Bills

I know, it sounds simple but we all have those times when shit happens and a monthly bill or two gets put off. When you are habitually late with bill payments or keep missing payments, this activity will eventually get reported to credit agencies. To avoid this, be habitually on time.

2 – Keep an Eye on Your Credit Report

Roughly four to six months after your discharge you should receive a credit report. Look it over carefully and if you see any errors report them immediately. In Canada, if you do not have a copy of your credit report, you can get a free copy. All you need to do is contact Trans Union or Equifax - you can even get them online! Try Credit Karma.

3 – Start Saving Money

Although a healthy savings account does not impact your credit score directly, what it can do is help avoid late payments. With enough savings in place to cover current bills and an emergency contingency plan, you should not have any problems staying current if you keep adding to that account.

4 – Get A Secured Credit Card

Secured credit cards are not to be confused with prepaid credit cards. A prepaid credit card will not do anything to help your credit. All you are doing with a secured credit card is showing lenders that you can establish a solid, reliable payment history, and the only real difference between this and a ‘regular’ credit card is that you must put your own money down to secure the funds. This will go a long way in helping to rebuild your credit for buying that future house. The best way to use one of these secured credit cards is to purchase some items on a monthly basis and pay the debt off quickly; ideally before your statement date. Repeat the process often to establish a good payment history.

Need Some Extra Tips on Rebuilding Your Credit?

I can imagine how difficult it may seem to get your credit rating back up to par following bankruptcy, but it doesn’t mean you’re doomed, you just have to put in some extra work to get the ball rolling again. I can offer some other suggestions as well. Call me for details at 289-213-7031.

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