A Consumer Proposal will be noted on your credit history for three years following completion of the Consumer Proposal or six years from the date of filing, whichever comes first. This is a comparable credit rating impact to traditional or non-profit credit counselling programs and debt management plans, even though these plans require you to pay your debts back in full, compared to only partial repayment needed in virtually all Consumer Proposals.
Many people are surprised to learn that transactions credit bureaus consider “negative”, such as a late, missed of bounced payment will be shown on your credit history for six years – this is the same amount of time as a bankruptcy notation, which shows on credit history reports for six years following discharge from bankruptcy.
Filing a Consumer Proposal does not prevent you from seeking new credit before the Consumer Proposal expires from your credit history report. Even during the time that the Consumer Proposal is noted on your credit history, it may still be possible to obtain new credit, including renewal of ongoing commitments such as your mortgage, financing the purchase of a new vehicle, or even a credit card.
Tools and resources to help you rebuild your credit rating and information about actions you can take to improve your credit score are provided as part of the two financial counselling sessions that take place during your Consumer Proposal. It’s important to remember that a credit score can change massively in as little as two years depending on your actions.
For many people the relatively short-term impact to their credit history and score after a Consumer Proposal filing allows them to gain a financial fresh start and build a strong credit rating faster than if they tried to pay the debt (plus interest) on their own.
Watch our short video to learn more about rebuilding your credit after making a Consumer Proposal or filing a personal bankruptcy.