Congratulations! You've paid off your consumer proposal.
Now that those payments are behind you it's time to work on your credit score as it will reflect an R7 rating for three more years. Of course, this is a small price to pay to have stopped those collection calls and to get rid of the R9 rating you had while you were paying off your consumer proposal, but you still have a bit of work to do to fully restore it.
Fortunately, there are a lot of things you can do that will boost your credit score. Here are the top 5 tips that will help you get, and keep, your credit score in top shape.
1. Apply for a secured credit card.
A secured credit card can be used for your credit needs and also assist with rebuilding your credit score. It’s called a secured credit card because it uses collateral in your name as security; in other words, you are required to make a refundable cash deposit up front in order to get approved for the card. Be careful when figuring out how much collateral you will be required to provide. Banks often ask for 5x the credit amount, while Capital One often issues a $250 credit card with only $75 deposit.
2. Clean Up Your Credit File
Sometimes, even after you have successfully completed your consumer proposal, your creditors may report the wrong information to the credit bureau. Pull your credit report and see if all the information is accurate and up to date, if not, send a letter to each bureau with a request to update all the incorrect items.
3. Cover all your bills and debts in full before their due dates.
Start by watching for all the debts and bills you have to take care of after your consumer proposal is paid off. Be certain you cover the expenses on each bill before they are due. While you could pay the minimum required totals to keep your credit rating from being hurt, it is best to pay it all in full to show that you can handle larger debts without incurring interest charges.
4. Apply for a Second Credit Card.
Unfortunately one secured credit card won’t convince the lenders that you’re now a responsible borrower. Best practice is to have 2 credit facilities. After you’ve had your first card for a couple of months and you’ve cleaned up your credit profile, apply for a second card.
5. Avoid spending too much on any credit cards you have.
The total credit line you have could make an impact on your credit rating. Your rating will improve if you have more available credit on hand. You must avoid spending lots of money on your cards so you will ensure you have enough credit on hand.
Keep using the cards and paying the balance off every month. Try not to exceed 35 percent of the available credit limit. Usually after 12 months of paying everything on time the creditors will increase your credit limit without asking for more collateral making your credit cards unsecured.
If you don’t miss any payments and continue using your new credit cards responsibly, when the R7 is lifted (36 months after proposal is paid for) you’ll have a great credit score!