How to Rebuild Credit After a Consumer Proposal Canada (2026)

The R7 credit rating from a consumer proposal is removed from your Equifax report 3 years after completing all payments or 6 years from the filing date, whichever occurs first, and you can rebuild to a 700+ credit score within 2-3 years of completion by using secured credit cards responsibly, maintaining utilization under 30%, and making all payments on time.

Credit rebuilding requires immediate action starting during your active consumer proposal, not waiting until completion. The 3-5 year proposal period provides valuable time to establish positive payment patterns that offset the R7 notation impact.

How Long Does R7 Stay on Your Credit Report

R7 credit ratings from consumer proposals remain on Equifax credit reports for 3 years after you complete all payments or 6 years from the filing date, whichever comes first. This dual timeline means shorter proposals result in 6-year total impact due to the filing-date rule, while longer proposals extend to 7-8 years total due to the completion-plus-3-years rule.

For a consumer proposal filed in February 2026 and completed in February 2031 after 5 years of payments, the R7 is removed in February 2034. This equals 8 years total credit impact: 5 years during active proposal plus 3 years post-completion.

For a consumer proposal filed in February 2026 and completed in February 2029 after 3 years of payments, the R7 is removed in February 2032. This equals 6 years total credit impact because “3 years after completion” would be February 2032, which is exactly 6 years from filing—the filing-date rule and completion rule converge.

For proposals completed in under 3 years, the 6-year-from-filing rule always applies. Filing in February 2026 and completing in February 2028 means removal in February 2032 regardless of the early completion.

TransUnion follows similar R7 removal rules. Both credit bureaus require you to send your Certificate of Full Performance to update your file promptly after completion. Some bureaus do not automatically remove R7 notations at the scheduled date without proof of completion.

Learn comprehensive details about what consumer proposals are and how filing affects your credit immediately.

Start Rebuilding During Your Consumer Proposal

Beginning credit rebuilding during your active consumer proposal, not after completion, maximizes recovery speed. The R7 notation appears on your credit report the moment your Licensed Insolvency Trustee files your proposal with the Office of the Superintendent of Bankruptcy. Additional credit damage from starting rebuilding efforts is minimal because the R7 is already present.

Applying for a secured credit card within 30-60 days of filing establishes positive payment history during your 3-5 year proposal term. By the time you complete your proposal, you will have 3-5 years of on-time payment history offsetting the R7 notation impact. This positive history helps credit scores recover faster post-completion.

Many secured credit card issuers approve applicants with active consumer proposals. These lenders specialize in subprime and rebuilding credit markets. They report to Equifax and TransUnion monthly, meaning your on-time payments appear on credit reports immediately.

Starting rebuilding early also develops financial discipline during the proposal period. Learning to use credit responsibly with low limits and full monthly payoffs prevents returning to old spending patterns after completion. The two mandatory financial counselling sessions during your proposal reinforce budgeting and credit management skills.

Creditors included in your consumer proposal cannot offer you new credit during the proposal term due to the stay of proceedings. However, creditors not included and new lenders can extend credit. Most Canadians focus on secured cards and small credit-builder loans rather than major credit products during active proposals.

Waiting until after completion to start rebuilding means losing 3-5 years of potential positive payment history. Starting immediately upon filing takes full advantage of the proposal period for credit recovery.

Month 1-12: Get a Secured Credit Card

Secured credit cards require a refundable security deposit that becomes your credit limit. Depositing $500 provides a $500 credit limit. The deposit is held in a savings account and returned when you close the card or upgrade to unsecured. Secured cards function identically to regular credit cards for purchases and report to credit bureaus the same way.

Apply for a secured card within 30-60 days of filing your consumer proposal. Home Trust Secured Visa accepts applicants with active proposals and bankruptcy, requires $500 minimum deposit, charges approximately $60 annual fee, and reports to both Equifax and TransUnion. Capital One Guaranteed Mastercard accepts bad credit applicants with $300 minimum deposit and reports to both bureaus.

Refresh Financial secured card is available to consumer proposal clients and includes credit-building education and monitoring tools. Neo Financial and Koho offer prepaid cards that report payment history to credit bureaus, though some prepaid products do not report and should be avoided.

Make small purchases of $50-100 monthly on your secured card. Buy gas, groceries, or recurring subscription services. Pay the balance in full every month before the due date. Full monthly payments establish R1 ratings on the secured card account, demonstrating responsible credit use despite the R7 notation on proposal accounts.

Maintain utilization below 30% of your credit limit at all times. If your limit is $500, keep balances under $150. Lower utilization improves credit scores. Utilization above 30% indicates financial stress to lenders. Paying in full monthly automatically keeps utilization low.

Avoid cash advances, balance transfers, and using the card for large purchases you cannot pay off immediately. The secured card is a rebuilding tool, not an extension of spending capacity. Discipline during this phase sets the foundation for long-term credit health.

Never miss payments on your secured card. Even one missed payment during credit rebuilding severely damages recovery efforts and may trigger default on the secured card. Set up automatic payments if possible to ensure on-time payment every month.

Review consumer proposal costs and fees to budget for credit rebuilding expenses during your payment term.

Month 12-24: Add a Second Credit Product

Adding a second credit product after 12-18 months of perfect secured card payment history diversifies your credit mix and accelerates score improvement. Credit scoring models favor multiple credit types including revolving credit like cards and installment loans like personal loans or auto loans.

A second secured credit card from a different issuer provides additional revolving credit. Maintaining two cards with on-time payments and low utilization improves credit faster than one card alone. Total utilization across all cards remains under 30%—if you have two $500-limit cards totaling $1,000 credit, keep combined balances under $300.

Credit-builder loans are small installment loans designed specifically for credit rebuilding. Refresh Financial and Borrowell offer credit-builder loans of $1,000-$2,500 where borrowed funds are held in a savings account and released to you as you make monthly payments. Payments report to credit bureaus, establishing positive installment credit history.

For example, a $1,500 credit-builder loan with 24-month term costs approximately $70 monthly. All payments report as R1 if made on time. After 24 months, you receive the $1,500 principal minus interest. Total interest paid is approximately $180, which is the cost of establishing positive installment credit history.

Store credit cards from major retailers like Canadian Tire, Home Depot, or Leon’s may approve applicants with active consumer proposals. These cards typically have higher interest rates but provide additional revolving credit that reports positively. Use them sparingly for small purchases paid in full monthly.

Avoid applying for too many credit products simultaneously. Each application creates a hard inquiry that temporarily reduces credit scores by 5-10 points. Space applications 6-12 months apart to minimize inquiry impact. Two credit products after 12-18 months and a third after 24-30 months is appropriate pacing.

Do not apply for premium credit cards, unsecured personal loans, or mortgages during months 12-24. These products require higher credit scores and longer positive history. Premature applications result in rejections that harm rebuilding progress. Focus on subprime and rebuilding products during the active proposal period.

Month 24-36: Qualify for Unsecured Credit

Unsecured credit cards without security deposits become accessible 24-36 months after filing a consumer proposal with 2-3 years of perfect payment history on secured cards and credit-builder loans. Subprime lenders specializing in fair credit (600-650 scores) offer unsecured cards with higher interest rates and fees than prime cards but without deposit requirements.

Capital One, Milestone, and Indigo offer unsecured cards to consumers with fair credit. Interest rates range from 19.99-26.99%, annual fees are $50-99, and credit limits start at $300-500. These cards report to major credit bureaus and allow you to close secured cards and retrieve security deposits.

Applying for unsecured credit too early results in rejection and wastes hard inquiries. Wait until your credit score reaches at least 600 and you have 24+ months of on-time payment history. Check your credit score monthly using free services like Borrowell or Credit Karma to track progress toward unsecured card eligibility.

Auto loans from subprime lenders may approve applicants with active consumer proposals and 2-3 years of positive payment history. Interest rates are significantly higher than prime rates at 8-15% versus 4-7%, but securing a modest auto loan of $10,000-$15,000 for a reliable used vehicle adds installment credit diversity.

Expect to provide larger down payments of 10-20% for auto loans during credit rebuilding. Lenders offset higher risk with larger equity positions. A $12,000 vehicle may require $2,400 down payment versus $600-1,200 for prime borrowers.

Personal lines of credit remain difficult to obtain during active consumer proposals. Banks and credit unions typically require completion of the proposal and 12-24 months of post-completion history before approving unsecured lines of credit. Focus on cards and installment loans during months 24-36.

Maintain perfect payment history on all accounts during this phase. As your credit profile improves and scores rise, temptation to overspend increases. Discipline remains critical. Use credit for convenience and building history, not for lifestyle inflation or purchases you cannot afford with cash.

Compare consumer proposals versus bankruptcy to understand how R7 ratings impact rebuilding differently than R9 bankruptcy notations.

Year 3-4 Post-Completion: B-Lender Mortgages

B-lender mortgages become accessible 1-2 years after completing your consumer proposal once you have 4-6 years of post-filing credit history including 1-2 years post-completion. B-lenders specialize in applicants with credit challenges including past insolvency who have demonstrated rehabilitation through consistent positive payment patterns.

B-lender mortgage requirements typically include credit scores of 600-650, down payments of 10-20% versus 5% minimum for A-lenders, stable employment for at least 2 years with the same employer or in the same field, debt-to-income ratios under 40%, and completion of consumer proposal or bankruptcy with Certificate of Full Performance.

Interest rates from B-lenders are 0.5-1.5% higher than A-lender prime rates. If prime rates are 5%, expect B-lender rates of 5.5-6.5%. On a $300,000 mortgage, this rate difference costs approximately $3,000-$9,000 additional interest over a 5-year term. However, mortgage approval allows homeownership that rebuilds wealth and improves credit further.

Working with mortgage brokers who specialize in post-insolvency lending significantly improves approval odds. Brokers maintain relationships with multiple B-lenders and understand which lenders have favorable policies for consumer proposal completers. Brokers can package applications to highlight positive factors like stable employment and perfect post-proposal payment history.

Avoid mortgage applications until you have completed your proposal, have at least 12 months of post-completion history, and have credit scores consistently above 600. Premature applications result in rejections that delay subsequent applications by 6-12 months due to hard inquiry impact.

Some consumers refinance from B-lenders to A-lenders 2-3 years after initial purchase once credit scores reach 680-700 and the R7 notation drops off. This refinancing saves significant interest over the remaining mortgage term by accessing prime rates.

First-time homebuyer programs and government-backed mortgages through CMHC may be accessible post-consumer proposal with sufficient down payments and strong credit rebuilding. Consult with brokers familiar with these programs for specific eligibility requirements.

Year 6-8: R7 Removed, Full Recovery

The R7 notation drops off your credit report 3 years after completing all proposal payments or 6 years from filing date, whichever comes first. For most proposals completed in 4-5 years, removal occurs 7-8 years after filing. This removal significantly improves credit scores and access to prime credit products.

Immediately after the R7 drops off, credit scores typically increase 50-100 points depending on the rest of your credit history. Consumers with perfect payment history on 3-4 credit accounts, utilization under 30%, and no new negative items may see scores jump from 650-680 to 720-750 within 30-60 days of R7 removal.

Send your Certificate of Full Performance to Equifax and TransUnion when the removal date arrives to ensure timely updating of your credit file. Some credit bureaus do not automatically remove R7 notations without proof of completion. Include your full name, address, date of birth, and certificate in your request.

Dispute any lingering R7 notations that remain on your report after the scheduled removal date. Credit bureaus must investigate disputes within 30 days and remove inaccurate information. If the R7 persists despite proper removal dates, escalate to the Financial Consumer Agency of Canada.

Prime credit cards with rewards, low interest rates, and no annual fees become accessible once the R7 is removed and scores exceed 700. TD, RBC, CIBC, and other major banks approve applicants with 700+ scores for standard credit products. These cards offer significantly better terms than subprime products used during rebuilding.

A-lender mortgages at prime rates become available 3-4 years after proposal completion once the R7 is removed. Refinancing existing B-lender mortgages to A-lender mortgages saves 0.5-1.5% in interest rates, reducing payments significantly over the remaining mortgage term.

Full credit recovery means returning to pre-proposal credit access with lessons learned about responsible credit use. The discipline developed during rebuilding prevents repeating past mistakes. Many Canadians achieve better financial health post-proposal than before filing due to improved money management skills.

Credit Rebuilding Best Practices

Five factors determine credit scores with different weights: payment history accounts for 35%, utilization accounts for 30%, length of credit history accounts for 15%, credit mix accounts for 10%, and new credit inquiries account for 10%. Optimizing each factor accelerates rebuilding.

Payment history is the most important factor at 35% of your score. Never miss payments on any account including secured cards, credit-builder loans, auto loans, rent, utilities, or phone bills. Even one 30-day late payment drops scores 50-100 points and remains on reports for 6 years. Set up automatic payments or payment reminders to ensure perfect on-time payment.

Utilization measures how much of your available credit you use. Keep balances below 30% of limits at all times, and ideally below 10% for maximum score benefit. If you have a $1,000 credit limit, maintain balances under $100. Pay off balances in full every month to keep utilization consistently low.

Length of credit history rewards long-standing accounts. Never close your oldest credit card even after upgrading to unsecured cards. Closing old accounts reduces average account age and hurts scores. Keep secured cards open by using them for small recurring purchases paid automatically.

Credit mix means having both revolving credit (cards) and installment loans (auto loans, personal loans). Maintain 2-3 credit cards and 1 installment loan for optimal mix. Avoid having only cards or only loans—diversity improves scores.

New credit inquiries from applications temporarily reduce scores by 5-10 points per inquiry and remain on reports for 2 years. Limit applications to 1-2 per year during rebuilding. Multiple inquiries in short periods signal financial stress. Rate shopping for mortgages or auto loans within 14-45 days counts as single inquiry.

Monitor credit reports from Equifax and TransUnion quarterly for errors, unauthorized accounts, or identity theft. Consumers are entitled to free credit reports annually from each bureau. Dispute inaccuracies immediately to maintain clean credit files during rebuilding.

Understand warning signs that indicate need for debt help to avoid repeating financial difficulties after rebuilding.

Common Mistakes That Delay Credit Recovery

Missing payments on rebuilding credit products is the most damaging mistake. A single missed payment on a secured credit card during rebuilding drops scores 50-100 points and appears as R2 or R3 notation alongside the R7 from your proposal. Perfect payment history is non-negotiable during credit recovery.

Maxing out secured credit cards defeats rebuilding efforts. Utilization at 100% tells lenders you are financially stressed and cannot manage credit responsibly. This keeps scores in the 500-600 range even with on-time payments. Maintain utilization below 30% at all times by limiting purchases to amounts you can pay in full monthly.

Applying for too much credit too quickly creates multiple hard inquiries that damage scores and signal desperation to lenders. Spacing applications 6-12 months apart allows credit profiles to absorb inquiries without significant damage. Two credit products in the first 12 months, a third at 18-24 months, and a fourth at 30-36 months is appropriate pacing.

Closing oldest credit accounts to retrieve secured card deposits shortens credit history length and reduces available credit, increasing utilization percentages on remaining accounts. Keep secured cards open even after obtaining unsecured cards by using them for small recurring charges like Netflix subscriptions paid automatically.

Applying for prime credit products prematurely before scores and history support approval wastes inquiries on rejections. Wait until credit scores consistently exceed 650 before applying for unsecured cards, and 680+ before applying for prime cards. Premature applications delay rebuilding by 6-12 months.

Ignoring the two mandatory financial counselling sessions during your consumer proposal misses valuable budgeting and money management education. These sessions teach skills preventing future financial difficulties. Taking counselling seriously improves long-term financial health beyond just credit scores.

Failing to budget for secured card deposits and credit-builder loan payments creates financial strain during rebuilding. Budget $500-1,000 for initial secured card deposits and $50-100 monthly for credit-builder loan payments when planning credit recovery. These costs are investments in future credit access.

Not monitoring credit reports quarterly allows errors, fraud, or incorrect reporting to persist undetected. Free credit monitoring through Borrowell, Credit Karma, or direct bureau requests helps catch issues early. Dispute inaccuracies immediately to maintain clean files during recovery.

Bottom Line Recovery Timeline

Credit rebuilding after a consumer proposal is achievable within 2-3 years of completion by starting with secured credit cards immediately upon filing, maintaining utilization under 30%, making all payments on time, adding a second credit product after 12-18 months, qualifying for unsecured cards after 24-36 months, and targeting B-lender mortgages 1-2 years post-completion with 10-20% down payments. The R7 rating clears 3 years after your last payment or 6 years from filing, whichever comes first, typically resulting in 6-8 years total credit impact depending on your payment term. Unlike bankruptcy’s R9 rating lasting 6-7 years post-discharge, the R7 from proposals is less severe and allows faster access to rebuilding products and mainstream credit. Many Canadians achieve 700+ credit scores within 2-3 years of completing proposals through disciplined credit use, ultimately reaching better financial health than before filing due to lessons learned about money management during the proposal and counselling process. Calculate your consumer proposal payment to begin your debt elimination and credit recovery journey, or visit the consumer proposal hub to learn about filing options and timeline expectations.

This article provides general information and should not be considered legal or financial advice. Consult a Licensed Insolvency Trustee for advice specific to your situation.

Last updated: February 2, 2026