re-establishing credit: Bankruptcy Alberta

Posted on Wednesday, March 14, 2007

About how long does it normally take to re-establish credit after a bankruptcy. Does a secured credit card really help your credit score or it this just wrong info? I figured it wouldn't have a huge impact, is this true? Any suggestions on how to re-establish without paying ridiculous interst rates, signing away my first born, promising a limb...?

1 Comments:

At 9:39 AM, Barton Goth, GCO, Bankruptcy Trustees said…

With a little effort, you can usually re-establish your credit in as little as two years. Using a secured credit card is a good way to start as regular payments you make show up on your credit report, but I prefer loans as they seem to be given a heavier weighting in the re-establishing credit process.

In terms of what we recommend for rebuilding credit, the following steps should help you to get back on track as quickly as possible.

1. Talk to your banker and say you want to reestablish your credit rating.

2. Be a regular and persistent saver.

3. Borrow using your savings as security. Secured loans are debts you incur that are backed up by some sort of asset or guarantee and are the easiest type of loans to obtain (consider obtaining a secured credit card from an organization such as Hometrust or Capital One).

4. Borrow for an RRSP. For some reason, banks have made it easier to obtain loans for RRSP’s than most other forms of credit.

5. Replicate steps 3 & 4.

6. Borrow when you don’t need to. Obtain a small line of credit. Use it to pay bills and then immediately pay off the line. Repeat this process and over time, it will have a marked improvement in your credit report.

The key to all of this is that you must pay your bills on time. Don’t bounce any cheques, don’t miss any due dates, and don’t overdraw any of your accounts (even if you have overdraft protection). As well, always remember doing the above on a small scale reduces the risk and can increase the number of contracts you can enter into and hence the number of positive comments on your credit history.