When you file a bankruptcy or consumer proposal your credit score may initially drop, but the good news is that the lower your credit score, the easier and faster it is to increase your credit score. Your credit score will show the largest improvement after you are discharged, so your first goal should be to complete your bankruptcy or consumer proposal as quickly as possible.
What Helps Your Credit
1. Build Savings First
Before focusing on credit, make sure you have cash in the bank.
Savings help you:
- Avoid payday loans or high-interest credit in emergencies
- Cover deposits for secured credit cards or utilities
- Reduce the risk of missed payments
Savings are not reported on your credit report, but they are one of the most important foundations of successful credit rebuilding.
2. Pay Every Bill on Time — No Exceptions
Payment history is the single most important factor in your credit score.
A single late payment can reduce your credit score by dozens of points — even if the bill is small. Cell phone providers, in particular, report late payments to the credit bureaus.
To avoid missed payments:
- Set calendar or phone reminders before due dates
- Use automatic payments where possible
- If you prefer manual payments, set auto-pay for the minimum amount as a backup
- Consider paying bills every payday so you’re always ahead
Paying on time does more for your credit than any other action.
3. Keep Credit Card Balances Low
You do not need to carry a balance to build credit.
Credit utilization — how much of your available credit you use — has a major impact on your credit score. High balances signal risk to lenders, even if you make payments on time.
Best practices:
- Pay credit cards in full every month
- Keep balances well below your credit limit
- Consider paying your card every payday to keep reported balances low
Credit cards should be treated as a method of payment, not a way to finance your lifestyle.
4. Let Time Work in Your Favour
Credit history matters. Older accounts in good standing help your credit score.
This means:
- Keeping credit accounts open once established
- Using cards occasionally (and paying them off) rather than letting them sit unused
- Avoiding unnecessary card upgrades that close old accounts
Start with lower limits and increase them later if needed — account age matters more than limit size early on.
5. Aim for the “2 and 3” Minimum (When Appropriate)
To be considered fully re-established for major financing, lenders typically want to see:
- Two new active credit accounts or trade lines
- Each with a credit limit of $3,000 or more
A “trade line” is a line on your credit report, and would include a credit card, line of credit, car loan, car lease, loan or mortgage.
You do not need to reach this immediately. The goal is to meet this guideline before applying for major credit such as a new car loan or mortgage.
6. Credit Cards Matter
Because credit cards are “revolving” credit (the amount you owe goes up and down throughout the month as you make purchases and payments) credit cards have the most impact on your credit score. So, the fastest way to improve your credit score is to get two new credit cards, and gradually increase the credit limits until they are each at $3,000 or more.
For credit rebuilding purposes:
- One or two credit cards used lightly and paid in full each month are usually more effective than multiple loans
- Increasing credit limits gradually is better than opening many new accounts
- Having two well-managed cards is generally better than having one card with a very high limit
7. Apply for Credit Sparingly
Each credit application creates a “hard inquiry” on your credit report, which can temporarily lower your score.
To minimize damage:
- Apply for one product at a time
- Avoid multiple applications close together
- Stop applying for credit several months before major financing
Shopping around for a car loan within a short period is normal and usually counts as a single inquiry — spreading applications out over time does not.
8. Review Your Credit Report Before You Apply for Credit (And Regularly After That)
Errors are common, especially after insolvency.
A good strategy is to:
- Get your Equifax report one year
- Get your TransUnion report six months later
- Alternate going forward
Check that:
- Insolvency information is reported correctly
- Included debts are properly coded
- Personal information is accurate
- Payments on new accounts are properly reported
Dispute errors in writing and keep records of your correspondence.
What Hurts Your Credit (What Not to Do)
- ❌ Don’t miss or delay payments, even by a few days
- ❌ Don’t carry balances to “build credit” — this costs money and does not help
- ❌ Don’t apply for multiple credit products at once
- ❌ Don’t rely on credit for everyday living expenses
- ❌ Don’t close old credit cards unnecessarily
- ❌ Don’t rush to increase limits you don’t need
- ❌ Don’t apply for credit right before major financing
Slow, steady progress beats quick fixes every time.
A Final Reminder
Your credit report is only one part of a lender’s decision.
Stability matters too — including income, job security, savings, and affordability. Rebuilding credit works best when it is part of a broader plan to stay financially healthy.