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Auto Source Finances Trustees’ can answer a number of questions people often ask relate to credit repair after bankruptcy: I filed for personal bankruptcy in Canada – for how long will it stay on my credit report? Can I somehow repair my credit after filing for bankruptcy? Is it possible to erase bad credit history? Your credit rating determines whether or not you will be able to get a loan in the future. A bad credit report might mean that you will not be able to get a car loan, mortgage, or debt consolidation loan. A bad mark on your credit report – such as filing bankruptcy – will (except in very special situations) remain on your credit record a maximum of six years. After that, the information is dropped from your record. Unless it’s a double bankruptcy which will then stay on your credit report for 12 years. Is credit repair after bankruptcy a possibility or you have to wait the six years to pass for the record to get cleaned? Unfortunately, you can’t totally erase your bad credit, Because you can’t remove bankruptcy from your report – but there are things that you can do to improve your credit history. Suggestions on how you can repair your bad credit follow.

 

How to repair bad credit – the six steps plan Get a credit report

First, you need to do a credit check on yourself. In most cases you can obtain your own credit report for free, or for a nominal charge. There are two main credit bureaus in Canada:

Equifax 1-800-465-7166 Trans Union 1-800-888-4213

 

Review your credit report

Review your credit report for any errors or negative comments.

An error may include a debt that you have already repaid

A negative comment may result from a department store credit card that you stopped using ten years ago, if it had a $10 balance owing, it may still show up on your credit report.

Correct any errors on your credit report

If you find an error, contact the credit bureau and offer proof that you do not owe the money. You may need a letter from the creditor indicating the payments were made, or you may provide cancelled cheques to indicate payments were received.

You may also send a letter to the credit bureau explaining your side of the story; your comments can be attached to your credit report.

Repair Information on your credit report

If you owe a creditor $10 and they have filed a negative credit report with the credit bureau, repay the creditor and ask the creditor to note on your credit report that the debt has been paid. If a debt legally owes, the debt must be paid or discharged before it can show on your credit report as being paid or discharged.

Pay off your Debt

Even if your credit report indicates that you have made all of your regular monthly payments, a potential lender may look unfavourably on high levels of debt. The solution is to pay off as much of your existing debt as possible before applying for a new loan.

We recommend that you pay off your highest interest debts first, so pay the 18% interest credit card off first, and then repay the 16% interest credit card.

The lower your debt, the easier it will be to obtain a loan. Your monthly household budgeting plan should include specific repayment amounts for each of your debts.

Take Some Action

If you have more debt than you can possibly repay, your credit report will only improve by formally dealing with your debts. You may need to file a formal proposal to your creditors, or consider consumer credit counselling and a debt management plan. For professional advice and further assistance, please contact a debt management consultant or a licensed bankruptcy trustee.

To conclude, you can’t erase a bad credit with a personal bankruptcy note on it, but partial credit repair after bankruptcy and credit improvement in general is possible – and it is in your hands. If you want to obtain a car loan you can actually start rebuilding your credit prior to discharge of your bankruptcy. Auto Source Finance works with VFC who will grant you a car loan even while you’re in bankruptcy. You can start building your new credit right away. You may have to pay a large interest rate in the beginning but your credit is worth the interest. After you have made 10-12 payments on time Auto Source will help you reduce your interest rate to prime lending rates. So if you think you cannot get a Car because you are bankrupt or have no credit or bad credit talk with Auto Source Financial and start building your credit Now!

If you have recently filed bankruptcy, you may wonder if its possible to get auto financing again. There are more and more loan companies all the time that have new programs to help finance people with bad credit. An auto loan is easier to get financing for than a personal loan or an unsecured loan because the lender can use the car as collateral against the loan, in case the borrower ever defaults or doesn’t make the loan payments.

Here are some tips to help you when getting financing to purchase or refinance a vehicle after a recent bankruptcy.

1. Get Financed To Re-establish Your Credit – Getting a new car loan can help you re-establish your credit when you make your payments on time. Once you have made payments on time for about 6 months or longer, you should be able to refinance your car at a much lower rate. As you make your payments on time, your credit score will increase.

2. Buy The Lowest Priced Car You Can – When financing a car after a recent bankruptcy, you can expect to see interest rates as high as 14-19% or more. It is not wise to buy a car that is more expensive than you need because, initially, you will be paying such a high interest rate on the amount you are borrowing on. If you do want a more expensive car, wait until you have made payments on time for a year or two, after your credit rating has increased. Then, you should be able to get an interest rate of around 9-10% or less.

3. Get Multiple Offers – There are many lenders online that will offer you up to 4 offers from one application. Most of these loan companies will not even pull your credit with the initial application, they will just ask you to describe your credit. This way, your credit score will not drop from being pulled too often.

To view our list of recommended auto financing companies online, visit this
page: Recommended Car Loan
Companies Online For People With Bad Credit.