A consumer proposal is a formal debt settlement arrangement under the Bankruptcy and Insolvency Act. It is a viable option for many Canadians with unmanageable debt, but it comes with significant credit consequences. Here's what to expect and how to rebuild.
How a Consumer Proposal Affects Your Credit
A consumer proposal is noted on your credit report and is typically recorded as an R7 rating on the affected accounts. It remains on your Equifax report for 3 years after you complete the proposal, and on your TransUnion report for 3 years after completion or 6 years from the filing date, whichever comes first.
During and after the proposal, your credit score will be significantly lower, typically in the 500-560 range even after completion.
The Rebuilding Timeline
Most people can reach a 650-680 score within 2-3 years of completing their consumer proposal with the right rebuilding strategy. Reaching 700+ typically takes 3-4 years post-completion.
Step 1: Get a Secured Credit Card Immediately
The moment your proposal is complete, apply for a secured credit card. Use it for small recurring purchases like a streaming subscription and pay it off in full every month. This builds positive payment history immediately.
Step 2: Monitor Both Bureaus
Errors are common after consumer proposals. Check that all proposal accounts are marked correctly. Sometimes accounts that were included in the proposal continue to show as unpaid collections separately, which is inaccurate and disputable.
Step 3: Address Remaining Errors
This is where credit repair specifically helps. After a consumer proposal, reports often contain: accounts listed as unpaid that were included in the proposal, duplicate negative entries, and incorrect dates that extend the negative reporting period.
These errors can keep your score artificially low even after the proposal is complete. Disputing them can meaningfully accelerate your recovery.
Step 4: Be Patient and Consistent
No single action rebuilds credit overnight. Consistent on-time payments over 12-24 months, low credit utilization (under 30%), and clean new accounts will rebuild your profile.
Our Role
We work specifically with clients post-consumer proposal to identify and dispute errors on their reports. We cannot remove the proposal notation itself, but we can ensure it is reported accurately and that no additional inaccurate negative items are dragging your score lower than it needs to be.