Although a person's credit rating is useful information for financial institutions, a number of factors have a direct impact on your credit rating.
If you are shopping around for a loan, every previous request for your credit history will be called up.
Furthermore, your creditors report on how you repay loans - whether they are in good standing ("R1) or in collection ("R9").
The explanations below are for your information only and may be subject to change without notice.
| R1 |
Paid within 30 days of billing, or as per stipulations |
| R2 |
Paid beyond 30 days, but never more than 60 days or one late payment |
| R3 |
Paid beyond 60 days but never more than 90 days or two late payments |
| R4 |
Paid beyond 90 days but never more than 120 days or three late payments |
| R5 |
The account is at least 120 days past due but is not yet in collection |
| R7 |
The bill was paid after debt consolidation, voluntary deposit, or bankruptcy proposal |
| R8 |
Merchandise was repossessed |
| R9 |
Write-off, account submitted to collection |
However, the credit rating is not the only factor involved in the approval of a loan.
There is also the debt ratio, which is calculated in terms of debts/gross income.
There is also your solvency: do total assets exceed liabilities?
Yet another determining factor is employment status and residential stability.
As such, acquiring credit after a bankruptcy, a personal proposal, or a voluntary deposit is not easy, but neither is it impossible.
A good number of financial institutions will agree to issue a credit card, subject to a security deposit (also known as "earnest money.").
Another way to "rebuild one's credit" is voluntary, or forced, savings. Forced savings means a RRSP loan for a period not exceeding one year.
Provided you pay a deposit or down-payment, it may also be possible to lease or buy an automobile.
We encourage you to get in touch with us for more details.
