Every cloud has a silver lining. It’s always good to talk about the positive side of things and I’d like to share the following success story with you.
I had a visit to the office last week from a previous client of Hoyes, Michalos. They had filed a consumer proposal with us 7 years ago. Here is their story…
Along with clearing up the debts they had in a consumer proposal, one of the key things for them when filing was they wanted to know if they’d have bad credit for the “rest of their lives” or if there would be anything they could do to rebuild a good credit rating. They were hoping to be able to purchase a home in the future and did not want a bad credit rating to ruin their chances.
They understood that at the time of filing, their credit rating was average as they were behind with payments to some credit companies and up to date with others. Their debt load was too overwhelming and due to the threat of a wage garnishee, they chose to clear up the debt with a proposal to their creditors.
Here is how they re-built their credit rating. First of all they concentrated on paying off the proposal as soon as possible. After meeting with one of Hoyes, Michalos’ associated credit counselors they learnt new money management and budgeting skills and whenever possible they were able to pay a little more each month to reduce the length of time they’d be in the proposal for.
Upon completing the proposal, they sat down with a representative from their bank and talked about acquiring a secured credit card. They paid the bank a $500 security and the bank issued them with a credit card with a $500 limit. As the card was issued by the bank, they were able to use the card knowing that it would help to re-establish a good credit rating. The bank’s report the use of a secured credit card exactly the same way they do an unsecured credit card, so each month they used the card to make a purchase, provided they managed the re-payments on the card responsibly, they were rebuilding a new, good credit rating.
Three years later, after the credit bureau removed the proposal from their credit record, the only thing left on the report was the payment history of the new secured credit card they had acquired. As they had used the card responsibly and made the payments on the card on time each month, they had a good payment history. Further to this, as soon as the proposal was finished and they had no debt to service, they were able to concentrate on saving up for a down payment for a future home.
The bank noticed the success and within three months of the proposal being removed from their credit report, the bank, seeing that they had a good credit rating and a down payment saved, offered them an unsecured credit line and also invited them to sit down and chat about applying for a mortgage.
They are now on their way to purchasing their first home.
Rebuilding credit is not easy. It requires discipline, time and patience, but if you are prepared to put the time and effort in, the rewards can be there.
Taking control of your financial future is always possible and we are here to help show you how.
If you’d like to talk to someone for more information or to discuss solutions to your financial problems, please give our office a call at 310-PLANÂ or e-mail me to set up a no-charge initial consultation. I’ll review your options with you in confidence and determine what makes sense for you and your family.
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