The consumer proposal has become a very popular debt relief option in recent years, often because of its ability to provide individuals with significant relief from an often overwhelming financial conundrum. The common characteristic for those seeking relief through a consumer proposal – a fresh start.
But what happens once that fresh start has, well, started? Once the interest accumulating on the credit stops, collection action stops, and one consolidated payment makes maintaining control far easier? This affords many a fantastic opportunity to get their finances back on track, but often the question remains: what comes next?
The key to rebounding after a consumer proposal is rebuilding your credit. Once a consumer proposal is paid in full, it comes off your credit report after 3 years. So, for example, if it takes 4 years to pay of the proposal it will remain on your report for 7 full years. However, if you pay it off in 1 year, it remains for only 4. Since you can pay it off, in full, at any time, it works in your favour to do this as quickly as possible in order to start the process of rebuilding.
What constitutes re-established credit? A few years of payments made regularly, on time, without additional credit seeking behaviour is a great way to get that credit score back up.
How can you effectively re-establish your credit? A secured credit card is often suggested as a smart way to re-establish credit. By providing the credit company with fund that you can access, and by paying regularly, you work towards a strong credit history. However, you need to keep in mind that this represents a small repayment if there is a small limit, and this means a longer period of re-establishment.
A personal installment loan represents a fixed installment payment, and if your plan is to buy a home, the bigger the loan, the better. This is a better way to rebuild credit, faster.
Can you get a mortgage after a proposal? Absolutely. After 1 to 2 years of re-established credit after paying off the proposal, many individuals will qualify for mortgage funding.
Rebounding from a consumer proposal means learning from what led to the financial problem in the first place. It also means making a solid commitment to good budgeting and working to rebuild.
For more about rebuilding credit, including information about a personal loan, please call Prudent Financial today at 1-888-852-7647.