How to Rebuild Credit After Bankruptcy

Bankruptcy is a reset, not the end of your financial life. In Canada, a first-time bankruptcy usually stays on your credit report for about six years after discharge, but you can start rebuilding well before it disappears by showing lenders a new pattern of responsible behaviour.

The core formula is simple: clean up your records, pay everything on time, and use the right credit-building tools.

Use KOHO Credit Building

If traditional credit products feel risky after bankruptcy, KOHO Credit Building gives you a way to rebuild without taking on high-interest debt.

KOHO Credit Building:

• Creates a dedicated line of credit that appears on your credit report

• Charges a small $10 monthly subscription fee instead of interest

• Reports your on-time payments to Equifax every month

• Doesn’t require a large security deposit like many secured credit cards

Step 1: Check Your Credit Report and Fix Errors

After bankruptcy, start by understanding exactly where you stand:

• Get your credit reports from Equifax and TransUnion

• Make sure discharged debts are marked correctly

• Dispute any clear errors or accounts that should no longer be active

Many Canadian insolvency and credit-counselling resources recommend this as the first step in rebuilding.

Step 2: Build a Budget You Can Actually Stick To

To avoid sliding back into unmanageable debt:

• List your monthly income, fixed bills, and essentials

• Set limits on variable spending (eating out, subscriptions, non-essentials)

• Make sure there’s room for savings and your credit-building payments

A realistic budget helps you pay everything on time.

Step 3: Build a Track Record of On-Time Payments

After bankruptcy, lenders want to see that you can now handle responsibility:

• Pay every bill on time (utilities, phone, internet, subscriptions)

• Set up automatic payments or reminders so you don’t miss due dates

• Avoid NSF fees and overdrafts—they’re red flags for lenders

Step 4: Add Low-Risk Credit Products Slowly

Once your budget is stable and bills are on time, you can carefully add more tools:

Common options after bankruptcy include:

• Credit building programs

• Secured credit cards (backed by a cash deposit)

• A low-limit card or other small credit products recommended by a professional

When you use any of these:

• Keep balances low (aim to use well under 30% of the limit)

• Make full, on-time payments every month

• Avoid applying for lots of new credit at once

Step 5: Build a Small Emergency Fund

One of the best protections for your new credit is not needing to rely on it for every surprise expense.

• Start with a small target (for example, $500–$1,000)

• Keep it in a high interest savings account so it grows while it waits

• Use it for genuine emergencies instead of putting everything on credit

This makes it easier to avoid missed payments, which are especially damaging when you’re trying to rebuild.

How Long Will It Take?

You won’t rebuild overnight, but you can often see measurable progress within a year or two of consistent good behaviour.

Bankruptcy will stay on your report for years, but lenders care a lot about recent history—clean, on-time payments and responsible use of new credit products.

If you’re unsure where to start, it’s always a good idea to speak with a licensed insolvency trustee or accredited credit counsellor for personalized advice.