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How Long Does Bankruptcy Stay On Credit Report Canada

4 min read

how long does bankruptcy stay on your credit report

Written By

Courtney Johnston
Courtney Johnston

You might be contemplating filing bankruptcy if you’re facing insurmountable debt, unaffordable mortgage payments, or other financial distress. Bankruptcy should only be pursued as a final resort since it can damage your credit report significantly. But, in some cases, bankruptcy can give you the fresh start you want to start from scratch and rebuild your credit history.

Before filing for bankruptcy, make sure you talk to a qualified financial advisor, licensed insolvency trustee (LIT), or debt counsellor to make sure you’ve fully explored all of your options. The consequences of filing bankruptcy will linger for several years, so it’s imperative you seek legal and financial advice before filing.

But if you’ve already filed your consumer proposal or know bankruptcy is the right path forward for your finances, here’s everything you need to know about its impact on your credit report.

Do both credit bureaus report bankruptcies on your credit report?

Yes, both credit bureaus in Canada account for bankruptcies on your credit report. Filing bankruptcy is included in your public record, which is one of the five factors that help make up your credit score. If you file for bankruptcy with the Office of the Superintendent of Bankruptcy, expect your credit scores for both credit bureaus to drop significantly, in some cases to the lowest possible scores.

Credit scores in Canada range from 300 to 900, so your credit score could drop as low as 300. While this may be discouraging, if filing for bankruptcy is getting you out of debt, try not to focus on your score or credit report immediately. You’ll be able to start rebuilding it after a few months.

Does each credit bureau weigh bankruptcy on your credit report differently?

Although Canada’s two credit bureaus, Equifax and TransUnion, have different formulas for weighing credit decisions to calculate your credit score, bankruptcies are often treated similarly. You should expect your score to plummet with each credit reporting agency, at least in the short term. The bankruptcy will also be reflected on your credit report with each credit bureau.

How long does a bankruptcy stay on your credit history in Canada?

Bankruptcy stays on your credit report for many years. Both credit bureaus have different timelines for how long a bankruptcy mark can stay on your credit report. But both credit bureaus measure from the date filed or first hit your credit report.

When you file for bankruptcy in Canada, expect it to stay on your Equifax credit report for at least six years after it first hits your credit report. If your bankruptcy has a discharge date, it will remain on your Equifax credit report for up to six years from the date filed. If it does not, it will stay present on your Equifax credit report for seven years from the date you declared bankruptcy.

TransUnion keeps your bankruptcy on your credit report for six years from the date you filed for bankruptcy, but it can be longer if you live in certain provinces. Residents of Newfoundland, Labrador, Ontario, and Quebec should expect a bankruptcy to stay on their TransUnion credit report for seven years from the date they filed. If you live in Prince Edward Island, it can remain on your credit report for up to ten years from the date you filed for bankruptcy.

How to rebuild your credit report after filing for bankruptcy

If you filed for bankruptcy in Canada, you might be focused on rebuilding your credit report as soon as possible. Declaring bankruptcy can drag your credit report down, but there are some tips you can implement to rebuild your credit.

1. Create a realistic budget

While building a budget won’t boost your credit on its own, it will help you develop the financial habits you’ll need to manage credit accounts responsibly. It will also help you live within your means and avoid turning to credit to finance nonessential purchases.

You can use a budgeting app or template to help you get started or create one from scratch. You’ll want to track your monthly expenses against your monthly income to make sure you know where your money is going. Find ways to pare back on your spending categories, and make sure you include savings goals as a part of your budget.

Getting in the habit of spending within your means will help you in the long run, and eventually, this practice will trickle down to your credit report.

2. Have your rent payments reported to the credit bureaus

Since you may have fewer credit accounts than before, having your rent payments count towards your credit report can be an easy way to start rebuilding your credit history. The only catch is you’ll likely have to pay for this service.

Right now in Canada, you can enroll to have your rent payments count towards your credit report with Rent Advantage (through Borrowell) or with FrontLobby (through Landlord Credit Bureau’s credit reporting agency). Rent Advantage will cost you $8 a month, while Front Lobby costs $5 per month.

This is an easy way to get credit for a monthly expense that normally wouldn’t impact your credit record. It’s also a quick way to counterbalance the bankruptcy marks on your credit report, which will remain for at least six years from the date you first filed.

3. Consider a credit-building loan

If you’re nervous about applying for a credit card or simply want a less risky credit option, a credit builder loan might be worth exploring. Credit unions offer credit builder loans and typically don’t require a credit score for approval.

Here’s how a credit builder loan works: you’ll make regular payments on your loan, which will be reported monthly to the credit agencies. Once you’ve paid off the entire loan, you’ll get access to the full loan you’ve paid for.

This can be an excellent way to practice the discipline of making on-time payments while improving your credit.

4. Apply for a secured credit card

Once you’re ready to manage credit again, one of the most accessible credit cards to get approved for is a secured credit card. Most secured credit cards won’t require a hard credit check and the ones that do typically have lenient credit score requirements.

Why are secured credit cards easier to get? Because they’re less risky for the credit card companies. You’ll fund your credit card limit by providing a security deposit. You’ll then only be able to spend up to that security deposit. This protects the lender because if you miss a payment, it can use your security deposit to settle your account.

A secured credit card can be a valuable tool for repairing your credit. Every time you make an on-time payment, it can help grow your score, which will reflect well on your credit report. It may take months or even years after a bankruptcy to see improvement, but eventually, you will.

5. Try an alternative credit-building option

If taking on debt feels too risky right now, you might like KOHO’s alternative credit-building option. KOHO offers access to a virtual card for free. But when you sign up for its credit builder product for $10 per month, KOHO will begin reporting your card payments to the credit bureaus, helping you build credit with just a prepaid card.

KOHO also offers access to your free credit score, provides virtual cards for safer online checkouts, and can help you grow your money even more with a high-interest savings account. KOHO also offers overdraft protection coverage on its savings products, so you don’t have to worry about paying unnecessary charges.

6. Always make on-time payments

The best way to improve your credit report after you declare bankruptcy is to make sure you pay all of your bills on time. Your payment history accounts for 35% of your credit score. So, even one missed payment can be a red flag on your credit report. Since your bankruptcies can linger for several years from the date you filed, it’s important to lean on your payment history to boost your credit score.

Set up new credit accounts for autopay so you never worry about missing a payment again. Be sure to schedule calendar reminders so you can check your accounts to make sure everything’s on track. Late or missed payments can significantly damage your credit score, so take every step to avoid them.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!

Courtney Johnston

Courtney is a professional writer, editor and financial literacy enthusiast. You can find her writing on CNET, Investopedia, The Motley Fool, Yahoo Finance, MSN and The Balance. She spends her free time exploring different cities across the globe or enjoy some downtime with her two cats and one dog.



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