Dixie Auto Loans has been helping a higher proportion of Canadians who have gone through bankruptcy than normal recently. Whether through COVID or something else, hardship can happen to everyone but it’s not the end of the road.
We have helped lots of people build credit score after bankruptcy and get a competitive auto loan. We can help you too, as our auto loans team explains.
How to Repair Credit Score after Bankruptcy
We won’t pretend recovery is easy because it isn’t. It will take a couple of years and the bankruptcy will be on your credit history for 6-7 years.
It isn’t the end though. Many people have found themselves in the same situation, often through no fault of their own. Banks, lenders and other financial institutions understand there is more to bankruptcy than there used to be.
Follow these steps to help you build credit score after bankruptcy:
Open a New Bank and Savings Account
You don’t have to open a new bank account but we recommend it. You could continue using your existing one if it’s still open but we think a new start with a new institution works best.
Open a simple bank account that can receive salary payments and make automatic payments. You don’t need anything fancy to begin with.
If that account can come with a savings account and a credit card, get them.
Set Up Payments
Set your pay or salary to be paid into the new account and set up automatic payments for every outgoing you have.
The more you pay automatically, the less likely you are to forget one. Payment history is vital in rebuilding credit and we want yours to be spotless.
If you have payments that cannot be set up for automatic payments, set a calendar reminder for them so you don’t forget.
Use a Credit Card
Using a credit card is a cheap and easy way to build credit score after bankruptcy. Using a credit card responsibly is an easy way to rebuild without any negative outcomes.
Use the credit card for daily expenses and avoid buying things you wouldn’t normally buy. Think of it as a different debit card to buy gas, groceries or whatever you usually buy.
Make sure the minimum payment is set up each month and make that. Once that payment has gone out, pay off the balance in full.
Timing is useful here. We want to make the minimum payment so it leaves a positive mark on your payment history but we also want to minimize the interest you’ll pay.
Waiting until the minimum payment has gone through and then paying off the balance achieves that.
Get Another Card
Once you have had your first credit card for 6 months or so, get another. If you had to get a secured credit card, see if you can switch to a standard card. If not, get another card and use it alongside your current card.
Again, don’t buy things you wouldn’t normally buy. Use it as a replacement for your bank card and use it for daily expenses. Set up automatic payments and pay off the second card in the same way you pay off the first.
After another 6-12 months of this, you should have repaired your credit enough for an auto loan whenever you need one.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!