How to Build Credit After Bankruptcy in Canada

How to Build Credit After Bankruptcy in Canada

Posted on September 6, 2022

If you have spent any length of time burdened with debt that spiraled out of control, bankruptcy can be like a breath of fresh air. It’s a useful method of getting out of debt you have no hope of escaping from through other means but it isn’t something to be done lightly.

Recovering takes too long for that.

As bankruptcy can affect anyone, at any time, we asked our Port Colburn auto loans team for a simple habits we can change to help repair credit score after bankruptcy. This is what they came up with.

5 Habit Changes to Help Repair Credit Score after Bankruptcy

First, let’s be clear. When we say ‘simple’ habit changes, we mean straightforward changes you can make that don’t require intervention or any complicated product or service.

We do not mean that a habit is simple to change as we know they are not!

Now let’s get back on topic.

1.   Get into the habit of automating payments

One key reason people get into financial trouble is through missing payments. Whether that’s lack of money or busy lives, it’s easy to do.

That’s why we recommend using automatic payments for everything. Have your salary paid into your bank and set up automatic payments for every outgoing for the day after.

Make sure you include mortgage or rent, all bills, credit cards, auto loans and every outgoing you have.

2.   Get into the habit of budgeting

We are always recommending household budgeting because it’s a sure way to stay on top of finances. If you always know what’s coming in and going out, you always know there is money to pay bills or that you need to cut back to make ends meet.

Household budgets don’t have to be complicated, they can be as simple as anything. Just make sure it is kept up to date and includes every regular outgoing you have.

You can then adjust spending and saving month to month depending on what you have coming in.

Which leads us nicely onto our next habit.

3.   Get into the habit of saving

Everyone needs savings. We all experience emergencies and will need a cash injection at some point. Having savings means you don’t have to use a credit card or payday loan to pay for it.

Even if you can only afford $20-$30 a month, every little helps. Set up an automatic payment into a savings account the same as for your bills. Over time, all those $20-$30 a month will build into a nice emergency fund that can get you out of all kinds of trouble.

4.   Get into the habit of controlling credit card use

Credit cards can be incredibly useful in rebuilding credit after bankruptcy but they require willpower and self control. If you’re not up to that just yet, minimize their use as much as possible.

When you’re in a position to use a credit card, use it only for everyday expenses, set up automatic payments for the minimum each month but clear the balance every month to avoid interest.

Get into the habit of patience

Patience is essential in every walk of life. If you’re recovering from bankruptcy and rebuilding credit, you’ll need patience as it’s a gradual process measured in months and years.

If you’re used to buying whatever you want immediately on a credit card, you also need patience to learn that sometimes you just have to wait. It’s going to be tough to begin with but you’ll quickly find you enjoy whatever you buy a lot more if you have to wait and work for it!

When you’re ready for a car lease or loan, get in touch with the Port Colburn auto loan experts at Northway Ford for great deals on auto finance.

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