Simple and Effective Steps to Fix Your Credit Score in Canada

Understanding how to improve your credit score is essential for securing better loan terms, qualifying for a mortgage, and achieving financial freedom. This guide breaks down the most important steps Canadians can take to fix their credit, rebuild after bankruptcy, and maintain a strong financial foundation.

Table of Contents

1. Understanding How Your Credit Score Is Calculated

2. How Long Negative Information Stays on Your Credit Report

3. How to Qualify for a Mortgage After Bankruptcy or Consumer Proposal

4. 8 Proven Steps to Improve Your Credit Score in Canada

Understanding How Your Credit Score Is Calculated

Your credit score is a critical part of your financial identity. In Canada, scores range from 300 to 900, with higher scores indicating lower credit risk. Lenders, landlords, and even employers use credit scores to assess your reliability.

Key Factors That Affect Your Credit Score

1. Payment History (35%)Your record of paying bills on time is the most important factor. Missed or late payments can seriously damage your score.Tip: Set up automatic payments or reminders to never miss a due date.

2. Credit Utilization (30%)This is the amount of credit you’re using relative to your total limits.Tip: Keep your credit utilization below 30%. For example, on a $10,000 credit limit, keep your balance under $3,000.

3. Length of Credit History (15%)Longer credit histories improve your score.Tip: Avoid closing old accounts unnecessarily. Keep them open to demonstrate longevity.

4. Credit Mix (10%)Having a variety of credit types shows that you can manage different financial obligations.Tip: Only take on new credit when needed, not just to diversify.

5. New Credit Applications (10%)Each new application creates a hard inquiry. Too many in a short time can lower your score.Tip: Space out credit applications and avoid unnecessary inquiries.

How Long Negative Information Stays on Your Credit Report

Understanding how long bad credit stays on your record is crucial when working to repair your credit.

Type of Negative Info	Time on Credit Report
Late Payments	Up to 6 years
Debt Collections	Up to 6 years
Repossessions / Secured Loans	7 to 10 years
Legal Judgments	Up to 6 years (varies by province)
Bank Account Closures	Up to 6 years
Consumer Proposal	3 years after paid or 6 years from filing
Bankruptcy	6–7 years (first), up to 14 years (multiple)

Tip: Always negotiate with creditors and aim to resolve debts where possible. Paid or settled items look better to future lenders.

How to Qualify for a Mortgage After Bankruptcy or Consumer Proposal

Yes, you can still get a mortgage after a bankruptcy or consumer proposal in Canada. Here’s how:

Immediately After Discharge:Some alternative lenders may approve you, but expect higher interest rates and stricter conditions.Tip: Save for a larger down payment to improve your approval odds.

After Two Years of Rebuilding:Many mainstream lenders require two years of good credit behavior post-discharge.Tip: Obtain a secured credit card or small loan and make on-time payments to rebuild credit.

During Bankruptcy or Proposal:Private lenders may still offer options, but they are usually short-term and high-cost.Tip: It’s often best to wait until after discharge for better rates and stability.

8 Proven Steps to Improve Your Credit Score in Canada

If your credit score is low, you can start improving it today with these proven strategies:

1. Pay Your Bills On Time

Timely payments are the most powerful way to boost your credit.Tip: Use auto-pay or reminders to stay on track.

2. Reduce Outstanding Debt

Lowering your balances improves your credit utilization ratio.Tip: Focus on high-interest debts first.

3. Keep Old Credit Accounts Open

Older accounts lengthen your credit history.Tip: Use inactive cards for small purchases and pay off immediately.

4. Maintain a Diverse Credit Mix

Having multiple credit types can help your score.Tip: Use responsibly, and only open new accounts when necessary.

5. Limit New Credit Applications

Too many hard inquiries can lower your score.Tip: Space out credit applications and avoid unnecessary credit checks.

6. Check Your Credit Report Regularly

Errors on your credit report can harm your score.Tip: Check your report with Equifax or TransUnion, or use free apps like Borrowell or Credit Karma.

7. Negotiate With Creditors

Settling or paying down collections may improve your profile.Tip: Ask creditors if they will remove the item once paid.

8. Monitor Your Progress

Use credit monitoring tools to track your improvement.Tip: Set monthly goals and revisit your credit report every 90 days.

Final Thoughts

Rebuilding credit in Canada takes time, consistency, and smart financial choices. Whether you’re recovering from missed payments, bankruptcy, or simply starting from scratch, the steps above can help you make measurable progress.

If you want to create a personalized credit improvement strategy or explore mortgage options post-bankruptcy, I’d be happy to help. Send me an email at ribhu@ribhurampersad.ca to book a 1:1 consultation.