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Consumer Proposal and Credit Ratings

Can I still get a loan?

A common question that comes up during an initial debt consultation is: “How does a consumer proposal impact my credit rating?” The concern is that people in general with bad credit cannot get a loan, and if they file a consumer proposal they will never be able to get a loan.

Consider someone who gets into a minor car accident. In financial terms that would be akin to not paying your creditors on time. Now consider that same person gets into a second car accident (or files a consumer proposal) several months after the first car accident. Will that person be able to get car insurance (or loan)? Yes, but the insurance premiums (or interest rate) for that individual will be higher.

How a Consumer Proposal impacts your credit rating

A consumer proposal will impact your credit rating in that schedule “A” financial institutions typically wait for, among other things, two years of repayment history into a consumer proposal before they consider approving you for a loan. There are numerous secondary lending institutions that will lend money to individuals shortly after a consumer proposal is filed. While the interest rates will generally be higher, over time a person can rebuild and improve their credit rating and ultimately get approved for credit at any financial institution.

Take action to get out of debt!

If you choose to do nothing or try to repay your debts on your own, interest charges will continue to accumulate and there may be fewer options available to you. Getting a fresh financial start will help you deal with your debt load, reduce your stress, improve your cash flow and help you move forward.

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