Rebuild Your Credit After a Consumer Proposal

Key Takeaways

• Check Your Credit Reports: Review your credit reports to ensure your consumer proposal is marked "completed" and correct any errors that could delay your credit recovery.

• Start With a Secured Credit Card: A secured credit card helps rebuild credit by demonstrating responsible use. Ensure it reports to major credit bureaus like Equifax and TransUnion.

• Create a Budget and Save Consistently: Stick to a budget, track expenses, and start saving—even small amounts. This builds financial resilience and improves your creditworthiness.

• Pay All Bills On Time: Ensure timely payments on all bills, including utilities and rent, as payment history significantly impacts your credit score.

Completed Your Consumer Proposal? What Comes Next

Finishing a consumer proposal is a major achievement—it means you've taken control of your debt and followed through on a legally binding plan to repay what you could afford. But while the stress of collections and legal action is behind you, the next big question many people ask is: how do I rebuild my credit score?

Whether your goals include financing a car, qualifying for a mortgage, sticking to a budget or just feeling financially secure again, restoring your credit is a key part of your recovery. 

Why Credit Rebuilding Matters for Long-Term Stability

A healthy credit score isn’t just about borrowing money—it affects your ability to rent a home, get a cell phone plan, secure insurance, and more. The good news? Credit can be rebuilt, and often much faster than people expect. This guide offers practical, step-by-step advice to help you get back on solid ground after a consumer proposal. 

How a Consumer Proposal Affects Your Credit

The R7 Rating Explained

When you file a consumer proposal, Canada’s credit bureaus (Equifax and TransUnion) assign you an R7 credit rating. This rating indicates that you're repaying your debts through a formal agreement—better than bankruptcy, which is rated as R9. 

How Long It Stays on Your Report

A consumer proposal typically stays on your credit file for:

• 3 years after completion, or

• 6 years from the date you filed, whichever comes first

So if you completed a 3-year proposal, the record may disappear from your report just 3 years after your final payment.

Why It’s Better Than Bankruptcy

In comparison, a first-time bankruptcy remains for 7 years after discharge, which usually occurs 9–21 months after filing. So even with a longer proposal repayment period, your credit may begin to recover sooner with a proposal than it would with bankruptcy. 

Step-by-Step: Rebuilding Credit After a Consumer Proposal

Step 1: Get Your Credit Reports

Before you can rebuild, you need to know where you stand. You're entitled to free copies of your credit reports from both major agencies:

• Equifax Canada: www.consumer.equifax.ca

• TransUnion Canada: www.transunion.ca

What to Check For:

• Ensure your consumer proposal is marked “completed”

• Look for errors, such as debts still marked as unpaid

• Check that all included accounts show a balance of $0
  

Disputing errors is free and can lead to a faster credit score recovery. 

Step 2: Open a Secured Credit Card

A secured credit card is one of the most effective tools for rebuilding credit. You pay a deposit—typically $200–$500—which acts as your credit limit. You then use the card for small purchases and pay it off in full each month. 

Why It Works:

• Activity is reported to credit bureaus

• Demonstrates responsible credit use

• Easy to qualify for, even with an R7 rating

Tips for Choosing the Right Card:

• Low annual fee (ideally under $60)

• Reports to both Equifax and TransUnion

• No hidden “application” or “activation” fees

Step 3: Create a Budget and Stick to It

Sticking to a budget is more than just advice—it’s a sign to lenders that you’ve developed healthy financial habits. Consider:

• Separating needs vs wants

• Tracking all expenses for 30 days

• Using tools designed for Canadian consumers like:

• You Need A Budget (YNAB) – trusted for envelope-style budgeting and bank syncing

• KOHO – includes budgeting tools, spending insights, and round-up savings

• Wealthsimple – offers budgeting insights alongside investing and savings

• Goodbudget – useful for manual tracking if you prefer not to link bank accounts

A well-managed monthly budget is your best protection against sliding back into debt. 

Step 4: Start a Small Savings Habit

It might sound backwards, but saving is a key part of rebuilding credit. Here's why:

• Emergency funds reduce reliance on credit

• Savings improve your financial resilience

• Consistency (not amount) matters most

Even $25/month in a high-interest savings account builds confidence—and could be used later as a deposit for secured credit or rent. 

Some credit unions and online lenders also offer “credit builder loans,” where small monthly payments are reported to credit bureaus and then refunded at the end of the term. 

Step 5: Pay Every Bill On Time

Your credit score is heavily influenced by payment history. That means even non-credit bills, like cell phones, utilities, and rent, can impact your score if they go unpaid or to collections.

What You Can Do:

• Set up automatic payments or reminders

• Keep your phone and internet accounts in good standing

• Communicate early if you can’t pay—many providers will offer extensions

Some landlords now report rent payments to credit bureaus as well. If you’re renting, ask if yours does. 

Rebuilding Credit Doesn’t Mean Taking on Unaffordable Debt

It’s tempting to think you need more credit to rebuild, but that’s not always true. Many people fall into new debt cycles by:

• Taking high-interest store cards

• Using payday lenders

• Responding to “guaranteed approval” loan ads

  
  

These can hurt your credit more than help. Focus on small, manageable steps that build trust with lenders over time. 

Real-World Example: Jamal’s Story

Jamal is a 41-year-old warehouse supervisor in Scarborough. After completing a consumer proposal that helped him eliminate $28,000 in debt, he set a goal to qualify for a car loan within 18 months. 

What He Did: 

• Opened a secured card with a $300 limit

• Paid it in full every month

• Set up a savings plan of $50/paycheque

• Tracked his credit score every 90 days

After 14 months, his score had increased by over 100 points, and he was approved for a car loan with a reasonable interest rate. 

His advice? 

“Small steps done consistently make a huge difference. You don’t need to be rich to rebuild, you just need to be intentional.” 

Staying Out of Debt: Next-Level Tips

Use Auto-Save Tools

Apps like KOHO, Wealthsimple, or Tangerine offer automatic savings features that round up purchases or transfer small amounts to savings. 

Track Your Progress

Equifax and TransUnion both offer credit monitoring services—some for free, some as a subscription. Many banks also provide credit scores in your online banking dashboard. 

Work With a Financial Counsellor

Licensed Insolvency Trustees provide two mandatory financial counselling sessions during your proposal, but you can always ask for more support. Many also refer clients to non-profit credit counselling agencies for long-term planning. 

Final Thoughts: You’re Closer Than You Think

A consumer proposal gives you more than just a break from debt, it gives you a fresh start. And with the right habits, tools, and patience, your credit can recover faster than you think. 

Don’t let an R7 rating stop you from applying for an apartment, buying a used car, or building financial confidence again. You’ve already done the hard part. Now it’s time to build forward. 

Need help figuring out your next steps? 

Book a free consultation with a Licensed Insolvency Trustee at Litvack Group. Whether you're just finishing a proposal or want help rebuilding from scratch, we're here to guide you—with empathy and experience.