Does a Consumer Proposal affect Credit Score?

One of the big worries for those considering a consumer proposal is whether or not they will be able to get a mortgage, take out a car loan or lease, or have access to credit. You will still be able to do these things after you have filed a consumer proposal.

Once you have filed a consumer proposal, the credit bureaus that track credit scores are notified. Your credit score is basically a record of how you handle debt, so it is important that you meet the payment schedule of your consumer proposal. Completion of the consumer proposal will ultimately have a positive impact on your score.

A consumer proposal stays on your credit record for three years after you have finished paying it off. A bankruptcy stays on the report for six years. For example, if a consumer proposal repayment plan is four years, it will take seven years before the proposal stops showing up on a credit record. From this, you might think that bankruptcy is easier on your credit rating, right?

But consumer proposals are flexible. You may be able to pay it off in two years, in which case it only affects your records for five years. Or you can even pay it off all at once, if you come into an inheritance or another lump sum, so that you’re credit history is cleared that much sooner.

Even when the consumer proposal is showing on your credit history, you may still be able to borrow money or get a mortgage, although it is much easier to do so once the note comes off the record. See After Bankruptcy: Rebuilding Your Credit for techniques to build a better credit rating following a bankruptcy or consumer proposal.