IMPACT ON CREDIT SCORE

In British Columbia, bankruptcies remain as a public record on a credit bureau for 6 years after the date of completion and consumer proposals for 3 years. Please note, this information is specific to BC and varies province to province

Public records account for 10% of a credit score, however this may not be the only factor having a negative impact. Learn more about how credit scores are calculated HERE on our website.

It is not uncommon for reporting errors to drag a score down; fixing these errors can have a significant, positive impact very quickly. Perhaps an account involved in a consumer proposal or bankruptcy is incorrectly reporting a balance owing, or has not been properly cleaned up after discharge. We can assist in fixing such issues through an Equifax Investigation. 

If there are significant credit concerns following a bankruptcy or consumer proposal, or many errors requiring resolution, our trusted partners can help. Click HERE for more information.

KEY TAKEAWAYS

• Life happens, a bankruptcy or consumer proposal does not rule out ever qualifying for a mortgage again

• Know how long you’ve been discharged - most lenders require at least 2 years of being discharged

• Establish fresh, clean credit post discharge

• Consider obtaining a secured credit card to start rebuilding credit

• Ensure all payments are made in full and on time
  

IMPACT ON MORTGAGE FINANCING

A bankruptcy or consumer proposal in the past does not rule out all mortgage options; however, options may be limited. There are specific criteria most ‘A’ lenders require: 

• 2 Re-established Tradelines - opened after a bankruptcy or consumer proposal has been discharged (e.g. credit cards, lines of credit, or secured loans).
• Ensure the credit limit is more than $2,500 and has a clean re-payment history (no late/missed payments) for 24 months after discharge.
• If down payment is more than 20% or there is a strong family co-signer, lenders may accept a minimum of 1 re-established account with a clean re-payment history for 12 months after discharge. 

• Bankruptcy or Consumer Proposal Documents - that outlines and confirms what was included.
• Some lenders require that there was no real estate involvement.

• Reason for Bankruptcy or Consumer Proposal (e.g. business failure, marital split, etc.).

• Down Payment Funds - sourced from personal resources with 90 days history (i.e. own savings, confirmed via 3 months bank statements).
• Some lenders will allow down payment funds gifted from family.

There may also be ‘B’ lender or private lending options if the above criteria are not met; however, these options come at higher costs and often require higher minimum down payments.

Please reach out for more information on what options may be available to you.