3 Ways to Boost Your Credit Rating During Consumer Proposal

Most people know that a good credit score is important. A good credit score enables you to qualify for bank loans, credit cards, make large purchases – and even tap into optimal interest rates or, in some cases, secure a job. It’s critical for your financial health and helps you achieve life goals.

But what about for individuals who are in a consumer proposal?

If you’re in a consumer proposal, you might feel worried about your financial future. More importantly, you might be asking yourself: Is it possible to boost my credit score right now?

The answer is yes, and you can begin working on this today. I’ll explain how, but first, let’s briefly review what a consumer proposal is.

The Consumer Proposal, in Review

A consumer proposal is a debt relief program created by the Government of Canada that allows individuals to regain financial stability and avoid bankruptcy. Those pursuing this option connect with a Licensed Insolvency Trustee (LIT) who proposes to creditors a recommended percentage of the debt to be paid. Once a formal agreement is reached with creditors, you’re required to make monthly payments over a period of time (normally 5 years).  

Those in consumer proposal can retain their assets and get relief from collection agencies and escalating interest rates and penalties. After completion of the program, individuals are considered to be clear of their debt.  

A consumer proposal is a great option available to those facing financial hardship and who are burdened by debt loads. But, as mentioned above, it doesn’t help your short-term credit rating. In fact, when you’re in a consumer proposal, your debts are marked the same as those facing bankruptcy.

So, what can you do about it?

First, you can take some comfort in the fact that once you complete your consumer proposal, your debts are marked as “7”, the code for “settled”.

There are additional ways, however, to take action immediately to improve your credit score. Below are three ways you can get going on this right away.

How to Improve Your Credit Score While in a Consumer Proposal

1. Monitor Your Credit Score and Make Payments

A simple and free (or low-cost) way to improve your credit score is to begin regularly monitoring it. If you’re not already familiar with what makes up a credit score, you can get a quick primer here.

Regularly monitoring your credit score provides you with an overall picture of your financial health and the opportunity to identify upward and downward fluctuations in your score. It also allows you to spot and address any errors or mistakes that may be negatively affecting your score. Errors do happen from time to time and this is probably not what you need right now. If you think you’ve detected an error or issue, you can report it to Equifax or TransUnion, Canada’s two credit bureaus.

You can also request a free copy of your credit report from Equifax and TransUnion once per year or you can pay a small fee to receive your credit score. A few Canadian companies, such as Mogo, Credit Karma, and Borrowell provide you with free monthly updates on your credit score and rating.

It’s also very beneficial to keep on top of your monthly bill payments, in addition to your consumer proposal payments. Your proposal should have taken into account your overall spending patterns and financial obligations. Making regular payments will improve your credit score in the short- and long-term and these improvements provide some added motivation.

2. Research Your Credit Options

It’s very difficult for those in consumer proposal to qualify for loans and credit cards due to their credit score. That makes it more challenging to rebuild their credit score because it takes credit to build credit.

Individuals in this situation have a few options to consider. If you’re looking to add a revolving credit product (marked “R” on your credit report), you can apply for a secured credit card to make purchases and improve your credit. A secured credit card requires a security deposit, an amount which becomes the credit limit and is held by the issuing financial institution. It’s easy to get approved, although candidates are normally required to have an income source. Those applying during consumer proposal need a letter from their trustee demonstrating that their proposal has been approved and is in good standing.

Although the allowable credit limits for secured credit cards can range from around $500 to $10,000, most applicants are approved for a small amount of around $1,000. Keep in mind that there is usually a set-up and monthly fee and that interest rates can often be a bit higher than other credit cards.

In any case, a secured credit card may be a good option to pursue if your opportunities for getting and building credit are limited. If you keep your account in good standing, it demonstrates a responsible use of credit.

If you want to add an installment credit product (marked “I” on your credit report), Climb offers the most flexibility and most competitive pricing of any product designed specifically for Canadians in consumer proposal with our Accelerator Plan. There’s no upfront fee and you can customize the amount you’re saving based on your budget, with plans as low as $7/week. Learn more about it here.

3. Make a Plan

No matter which credit building options you choose, and when you choose to get started, one thing will always be true: credit scores can’t be fixed in a day. Your credit score is built month over month and year over year, as you show consistent credit repayment (often with an installment product like our Accelerator Plan) and responsible credit usage (often with a secured credit card).

By making a realistic plan based on your budget and lifestyle, you can not only get back to where your credit score was before your consumer proposal, but you can even improve your score.

It just takes time and a reliable payment history reported regularly to the credit bureaus.


Though it can be stressful to see your credit score drop while in consumer proposal, there are actions you can take to begin to repair it today. By understanding your options and taking proactive measures, you’ll be well on your way to a brighter financial future.

If you have any questions about your options, don’t hesitate to reach out to our team at Climb today.

Author: Ryan Watt, CEO

Using the Home Buyers Plan to Help Fund Your Down Payment

Buying a home signals adulthood to many, you feel like you’ve made it… you’re a homeowner. While the excitement of buying a home can feel like you’re on top of the world, it can be difficult to get to that point. Specifically, with the prices of homes increasing at alarming rates, and wages staying stagnant, scraping together enough of a down payment can be incredibly challenging.

Millennials are at the age where they have graduated, started working full-time, and, in many situations, would like to purchase a home to start a family. With the average home price above $400,000 in many of Canada’s major cities to even put 5% down means you need $20,000 available in cash plus all the additional costs that are required such as legal fees, land transfer tax, and title insurance.

Most experts recommend putting down more than 5%, especially since CMHC will apply until you have 20% down. You’ll find if you only put 5% down, by the time you actually pay CMHC you will barely own 2% of your actual home.* This is incredibly risky if the market value of your home were to drop by a couple thousand dollars, you’ll easily find yourself underwater on your home.

It’s important to have a strong down payment when purchasing a home, ideally at least 10%. This is just enough to decrease the amount of CMHC you will pay while still maintaining a large portion of your equity. Of course, if you can put more down and hit that 20%, threshold where CMHC is no longer applicable, that is ideal.

Saving tens of thousands of dollars, maybe even hundreds of thousands can seem like a daunting task for many, but it’s important to break up this savings goal into bite-sized pieces. The first step is determining where your down payment should come from. If you’re contemplating between your RRSP and your TFSA, I’d argue the RRSP is the way to go.

With the RRSP, if you are a first-time home buyer you will have access to the Home Buyers’ Plan (HBP) which allows you to withdraw up to $35,000 from your RRSP1 without any tax implications. You have 15 years to repay this amount back into an RRSP account; it doesn’t have to be the account you withdrew the money from. To utilize the home buyers’ plan you need to fill out the 1036 form, provided by CRA, and send it to your financial institution for processing. With some institutions there will be a nominal fee to withdraw the funds, so it is important to check this prior to making the withdrawal. The RRSP is preferable to the TFSA for withdrawal because the account allows you to defer tax into the future as opposed to earning income tax free as you would in the TFSA. This makes the TFSA very lucrative if you are investing your funds and shielding the growth from the tax man. Since you will ultimately be taxed on the amounts you withdraw from the RRSP in retirement it makes more sense to allow the power of compound interest to accrue in the TFSA versus the RRSP.

Coming up with a down payment is a large task and leveraging some of the money you’ve been able to sock away can help you reduce the amount of CMHC you will pay. The government has set up the HBP to help new home owners get into the market by having access to some of their savings in a tax deferred manner. Utilizing this program allows young people to put more down on their home, minimizing the CMHC they will pay.

1 – These amounts must be in the RRSP for at least 90 days

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About the Author

Janine Rogan is a personal finance educator and CPA based in Calgary Alberta. She is passionate about sharing her financial knowledge with Canadians to help educate them to make money-smart decisions. Through her website, Youtube channel, and community engagement Janine shares solid financial advice that will make a difference in how you manage your money. Check out JanineRogan.com for more details.

How to KonMari Your Finances

Marie Kondo has been marginally well-known in America since her book “The Magical Art of Tidying Up” came out in 2014, but her star has risen significantly with the release of her Netflix show “Tidying Up with Marie Kondo”. She’s helped people all over the globe learn to declutter their lives with the “KonMari” method, an organizational philosophy inspired by the Shinto religion.

The method revolves around choosing the items you want to keep by deciding whether or not they spark joy. The idea is to pare down and organize your lifestyle, while also developing a deeper appreciation for what you have.

That approach can also be used to take a closer look at your finances. Here’s how to do it.

Why You Should KonMari Your Finances

The financial decisions we make reflect our deeper habits. Our weekly manicure or daily take-out isn’t just an activity, it’s a subconscious reinforcement of the patterns we develop over time. Sometimes, those patterns are in direct conflict with our goals and priorities.

That’s the purpose of applying the KonMari method to your finances – it forces you to look at your budget with a curious mind. Instead of making financial decisions based on affordability or ingrained habit, you’ll learn to make them based on personal fulfillment.

Make a List of Your Expenses

You need to visualize your expenses before you can decide what to cut and what to keep. Print out your bank and credit card statements from the past three months and lay them out before you.

Then, go through each transaction one by one with a pen or highlighter and ask yourself if they spark joy. A $10 Spotify membership might seem unnecessary at first, but not if listening to music keeps you sane on your hour-long commute.

Let your gut reaction be the primary guiding factor here. Don’t think about the feelings you should have or how someone else might feel. Just allow yourself to react genuinely.

Pay careful attention to expenses that don’t get used often, like gym memberships or items that spark guilt or shame when you examine them. Chances are, you’ll be better off without them.

One expense I removed from my life was a subscription to The New Yorker and The New York Times. My journalism mentor recommended I read them to see examples of good writing and reporting, but I didn’t enjoy them as much as my other publications. I felt guilty seeing stacks of unread magazines sitting on my floor, so I finally canceled my subscriptions.

Create a Routine

People think the KonMari routine is something to do once a year, like spring cleaning. In reality, you can apply the KonMari method every time you buy something.

When you go to check out, take a minute to examine if the item will really bring you joy. Are you buying those cinnamon rolls because they spark old memories of Sunday brunch with Grandpa or because you’re feeling stressed about work? Are you buying a new notebook because you love to journal or because you think it will finally make you the organized person you want to be?

It’s hard to be mindful in the moment, especially if you feel pressure from a salesperson or you’re distracted from a hard day at work. That’s why it can be helpful to wait 24 hours before making any significant purchases, which will give you time to consider how important the expense really is. Coming to a deeper understanding of your spending habits will make you happier with your purchases and keep you from buying things for the wrong reason.

About the Author

Zina Kumok is a trained journalist and has covered everything from professional sports to murder trials. Now, she specializes in personal finance and has written for brands and publications such as Mint, Investopedia and Discover. She paid off $28,000 worth of student loans in three years.

How to Budget as a Couple

When it comes to important relationship milestones, moving in with a significant other gets all the attention. It’s true that sharing the same space with someone is a big deal – and a reliable indicator of a relationship’s future – but there’s an even more important step that usually comes shortly after: combining your finances.

Learning to share your money is one of the most intimate things you can do. By pooling and managing your resources as a team, you’re committing to each other in a deep and lasting way. You might be able to just move out if a relationship falls apart, but disentangling bank and investment accounts is another story entirely.

That’s why it’s so important for couples to learn how to budget together. Here are some of the ways you can make the process easier.

Craft Your Why

Budgeting is like working out. Some people genuinely enjoy the burn and sense of accomplishment they get after leaving the gym. Others may know it’s the right thing to do, but struggle to find any kind of satisfaction from doing it. The difference lies in finding the right motivation.

When it comes to budgeting as a couple, both parties should understand why it’s important. The reason can be something common like, “Have more money to travel,” but it can also be something emotional like, “Pay for our child’s college education.” The more specific and personal your reason, the more likely it is to stick. My husband and I budget so we can save for retirement and other goals, like remodeling our house and traveling abroad. Try to be honest with yourself and don’t judge your reasons too harshly, even if they seem petty or embarrassing. It doesn’t really matter what your reasons are, as long as you have them.

Choose a System

There are many ways to budget, and each couple should find a routine that works for them. These days, lots of people use apps and software like Mint, Tiller or You Need a Budget. Other people prefer a spreadsheet or cash envelope system.

There’s no perfect budgeting solution, especially for a couple with different personalities. The important thing is that the approach works for both parties. If one person has been managing the money by themselves for a while, they should consider switching to a new arrangement if their partner has a strong preference. Take some time to test drive various methods until you find one both of you like.

One thing that seems to work for most couples is to allocate a certain amount of discretionary money for each person. This is money that both people can spend on whatever they want, without judgment from their partner. My husband and I even use separate bank accounts for that money, so our purchases are completely private.

You should also designate a certain time each week or month to sit down and budget together. Some couples even incorporate this into a date night so it’s a fun activity instead of a chore.

Compromise and Communicate

Budgeting as a couple is like a lot of relationship activities – it can bring you closer together or expose your problems. Money reveals our priorities, so it’s important to keep an open mind and avoid getting emotional. When you disparage your partner’s spending, you’re saying his or her needs don’t matter to you.

Use budgeting as an opportunity to talk about your feelings and your dreams for the future. Compromise when you can and acknowledge what your partner does to save money, like batch cooking meals or taking public transportation.

Budgeting should be a team sport, but that only happens when both people realize they’re not competing against each other. It’s OK if it takes some time to find an approach that feels comfortable, as long as you get there eventually.

Find out how Climb can help you and your partner’s financial situation. Click Get Started below and receive a free Personalized Credit Prescription with recommendations to help you build a better financial future.

About the Author

Zina Kumok is a trained journalist and has covered everything from professional sports to murder trials. Now, she specializes in personal finance and has written for brands and publications such as Mint, Investopedia and Discover. She paid off $28,000 worth of student loans in three years.

The Difference Between Being Pre-Qualified and Pre-Approved for a Mortgage

March 20th marks the first day of spring. It also marks the first day of the spring real estate market.

Spring is a great time to go out and look at properties. It’s the time when there’s traditionally the best selection of properties on the market for sale. But before you start looking at properties, it’s important to make sure you have your mortgage financing in order.

Many of us toss around the terms “pre-qualified” and “pre-approved” like they’re one and the same. While they’re both related to buying a home, they aren’t the same. Let’s take a look at the difference between being pre-qualified and pre-approved for a mortgage.

Being Pre-Qualified

If you’re toying with the idea of buying a home, getting pre-qualified is a good first step. When you get pre-qualified, the lender will ask you for basic information on your income, assets and debts. It will then do its own calculation to determine how much you qualify to borrow by way of a mortgage.

Being qualified doesn’t take very long. It can be done in under 10 minutes. Oftentimes, you won’t even have to visit the bank to do it. You may be able to do it online from the comfort of your home.

While being pre-qualified is helpful, it’s important to recognize that it only goes so far. For instance, it usually doesn’t include a credit check. It’s mainly used to give you a rough idea about how much you’d qualify to borrow for a mortgage.

If you’re serious about buying a property, you might skip the pre-qualification and go straight to being pre-approved, which we’ll talk about next.

Being Pre-Approved

Think of being pre-approved as the next step up from being pre-qualified. When you’re pre-approved for a mortgage, you’ll often get something in writing from the lender.

Being pre-approved is similar to being pre-qualified, except you’ll provide more information. You’ll typically provide a lender with permission to pull your credit, notices of assessment for the last two years, pay stubs, a letter of employment and financial statements as proof of your down payment.

By providing all this information, the lender can provide you with a more accurate mortgage pre-approval amount. This gives you the confidence to go out and look at properties. When you see a property that you like, you can make an offer knowing that your mortgage financing is likely rock solid.

Your lender will often provide you with a rate hold. A rate hold means the lender is securing a specific mortgage rate for you for a period of time (often 3 months). This can protect you if mortgage rates go up while you’re looking at properties. If that happens, the lender should provide you with the lower rate of your pre-approval.

While being pre-approved is helpful, it’s important to understand that you aren’t guaranteed the mortgage. The missing piece of the puzzle is the actual property. The lender needs to see the property that you’re buying before they’ll approve the mortgage. Chances are your mortgage will be approved, but it’s not guaranteed. As such, you might want to make any offers on properties conditional on financing to provide yourself with that much more piece of mind in case any issues arise.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.