What happens to my credit?
What Happens to My Credit Report If I File a Consumer Proposal?
If you have filed for a consumer proposal or are considering a consumer proposal, you are probably concerned about the effect it will have on your credit report and your borrowing power. Will you be able to buy a car, a house, get a credit card, or a loan? The answer is Yes!
When you file a consumer proposal a note goes on your credit report stating as much. Your credit report is a document that contains all of your credit history, including any action you decide to take with your debt. This can include things like debt management plans, bankruptcies, and of ourse, consumer proposals. This note will stay on your credit report for 3 years after the payments you have agreed to in the consumer proposal are finished. For example, if you had agreed to a 5 year plan to repay your debts, the note would be removed from your credit report after 8 years.So, why is a consumer proposal better than a bankruptcy, where the note stays on your credit report for only 6 years after you have filed? Consumer proposals are more flexible.You might have agreed to a 2 year repayment plan, meaning after 5 years the note disappears.And consumer proposals also allow you pay more than what is stipulated in the agreement. Even if you had agreed on a five-year payment plan, you could shorten it by making extra payments, thereby getting the note removed from your credit report that much faster.Once the note is removed from your credit report, borrowing money will be easier.Remember, though, that borrowing is not impossible with a note on your credit history. Things such as whether or not you’re paying your bills on time, how much of a down payment you have saved, and if you have a co-signer are also considered when you apply for a loan.