How can I rebuild my credit after my bankruptcy in Nova Scotia is done?

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

To begin, if you are currently an undischarged bankrupt, it will be impossible to obtain a loan. However, if you have been discharged from bankruptcy, a lender may consider your application. It will be more difficult to borrow if you have been discharged than if you have never been bankrupt before.

Lenders will also look at how long you have lived at your current address, your work history, your monthly income, and whether you have security for the loan. A co-signor may be necessary.

Below are suggestions for repairing your credit after bankruptcy.

First, save money! While you were bankrupt you made a contribution to your bankruptcy estate, by paying the trustee monthly. You have become used to living without that money, so start putting that money in a separate bank savings account each month.

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

Third, as you continue to save money each month, (and pay off your new credit card in full each 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’s possible that your bank will lend you an additional $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 on your way to repairing your credit.

Finally, continue saving. When you have another $1,000 or $1,500 you can likely use it as a 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 Nova Scotia in done.