How can I rebuild my credit after my bankruptcy in Alberta is finished?

Several factors will determine how quickly you rebuild credit after your bankruptcy in Alberta is finished and, in turn, your ability to borrow money.

If you are currently an undischarged bankrupt, it will be next to impossible to get a loan. However, if you have been discharged from bankruptcy, a lender may take your application into consideration. It will, however, be more difficult to borrow than if you were never bankrupt.

There are several other factors that lenders will likely want to look at. These factors include how long you have lived at your current address, your job history, your monthly income, and whether you have any security for the loan. They may also require a co-signor.

Here are some suggestions for repairing your credit following bankruptcy.

The most important thing to do is to save money! During the time you were bankrupt you were making a contribution to your bankruptcy estate, by paying the trustee an amount each month. Since you are now used to living without that money, start putting money into a separate bank savings account each month.

Next, once you have built up some cash for emergencies in the bank, you could consider using some of your savings to get a secured credit card. As an example, if you give the credit card company $1,000 as a security deposit, they will probably give you a Visa card with a $1,000 limit. Your credit card works just like a regular credit card, and even better, it shows up on your credit report! This is an important step to repairing your credit. More information on secured credit cards can be found here: http://www.moneyproblems.ca/SecuredVisa.htm

Third, as you continue to save money each month, (and pay off your new credit card in full every month), you could invest your next say $700 of savings in an RRSP. With a secured credit card and money already invested in an RRSP, it is possible that your bank will lend you a further $500 to invest in your RRSP. You now have $1,200 in your RRSP, and your tax refund may increase by $500 because of your RRSP contribution. You can use your tax refund to repay your RRSP loan!

Now, your credit report shows a credit card in good standing, an RRSP loan that you have paid in full, and you have $1,200 in an RRSP. You are now on your way to repairing your credit!

Finally, continue saving, and once you have another $1,000 or $1,500, you can probably use that money as the down payment on a car.

You can’t repair your credit right away, but if you continue to save money, and follow the steps listed above, you can gradually rebuild your credit after your bankruptcy in Alberta in finished.