Becoming a homeowner after bankruptcy is a topic I've touched on a little bit in past blog posts, but it's a question that comes up often and is always worth sharing more information about. After a someone has gone through a bankruptcy, they are naturally a little hesitant to re-open credit accounts, and that is completely understandable. But - if you intend on becoming a homeowner in the future and will require a mortgage, it is critical that you re-establish your credit.
Re-establishing Your Credit
After the date of discharge, you'll want to open up at least 2 credit accounts, which could include credit cards, line of credit, auto loan, or personal loan. Be sure these accounts are within your budget, of course.
Use Your Credit
Now that you have your accounts opened, but sure to use them! If it's an auto loan, simply paying your loan on time constitues as using the account. For credit cards and line of credit accounts, be sure to pay at least the minimum amount due and ensure the account receives your payment before the due date. Using your accounts often will build your credit history.
Your Clean Slate
After the date of discharge, be sure all payments are made on time. Steer clear of maxing your credit accounts, missing any payments or paying late. Those things will show up on your credit account and negatively impact your credit rating and your future mortgage approval.
Start Saving!
Set aside money every month to go towards your down payment and closing costs of your future home. This will demonstrate your ability to manage finances and strengthen your application.
Taking these steps after bankruptcy discharge will help to rebuild your credit and lay the foundation needed for future good credit, which may help you get approved for a mortgage.
Got questions? I'd love to answer them! Hit me up with your post-bankruptcy home buying scenarios or general mortgage questions anytime.
-Sarah
sarahnm@mortgagegroup.com
Toll-free across Canada 1-844-315-6609