The debt will be coded as an R7 which means you have entered into an arrangement to settle your debts with your creditors. A perfect credit rating is an R1, and bankruptcy is an R9, so a proposal is sometimes viewed as slightly better than a bankruptcy.
An R7 rating means that you have done a consumer proposal, a credit counselling program or you are making payments through an agreed arrangement to pay off your debt. An R8 is given when repossession has taken place, such as a car repossessed and sold, to pay off the loan.
An R1 rating means you make payments on time, whereas an R9 means you have declared bankruptcy. If you have filed a consumer proposal, you will have an R7 rating—a very low credit score that will remain unchanged until your proposal ends.
A consumer proposal will be removed from your Equifax credit report 3 years after you've paid off all the debts according to the proposal, or 6 years from the date it was filed, whichever comes first. Secured loans remain on your Equifax credit report for 6 years from the date filed.
TR: Number of times the credit grantor has reported an account update. RT: Type of account and manner of repayment: (See Trade Information Descriptions and Manner of Payment for detailed rating descriptions).
Yes, it is possible to have a credit score of at least 700 with a collections remark on your credit report, however it is not a common situation. It depends on several contributing factors such as: differences in the scoring models being used.
A consumer proposal is one of the best and safest debt consolidation options available. Creditors will generally accept your consumer proposal if you offer more than they would expect to receive in a bankruptcy.
Credit History and Score after a Consumer Proposal
A Consumer Proposal will be reflected on your credit history report for 3 years after the date you finish your Consumer Proposal, or 6 years from the date your Consumer Proposal started (whichever is soonest).
Now that you've put plans in place to manage your debt payments in a way that's manageable and fair for both you and your creditors, you are probably wondering how soon you can start rebuilding your credit and a stronger financial future. The good news is, you are allowed to obtain credit during your Consumer Proposal.
R9 credit can be resolved in one of a few ways:
1. You can pay the debt in full – it should be removed 7 years from the date the debt has been paid in full. 2. You can make a settlement on the debt with your creditor(s) the R9 credit should be removed from your credit 7 years from the date it is reported as settled.
What happens when you pay off your proposal? Once your consumer proposal repayment plan gets completed, you receive a Certificate of Full Performance. This certificate shows you have honoured your commitments and completed your consumer proposal. This is the last formal step in your consumer proposal.
A consumer proposal is not a life sentence. Rather, it is a fresh start! So, if you have the means to do so, paying your consumer proposal off early will help you get back on track more quickly, so you can start working towards rebuilding your credit and achieve financial peace of mind.
Disadvantages of a Consumer Proposal:
A proposal will usually take longer to complete than a bankruptcy. Lowering your monthly payment means longer time paying back, however, if your situation improves, you CAN pay off a proposal early. Credit rating is still affected – A Consumer Proposal DOES affect your credit.
The court may reject the proposal if it finds that the terms of the proposal are not reasonable or fair to the debtor or the creditors. However, if no request is made within 15 days, the proposal is considered approved.
You absolutely can, and often it is the fastest way to pay off a large debt like a consumer proposal. You may wish to take on a larger mortgage to cover both your property amount and the consumer proposal, provided there is sufficient equity in your property to cover the additional loan needed.
What does an R1 mean on a credit report? An R1 credit rating is the best rating you can have as it indicates to creditors that you will pay back funds in the shortest amount of time, typically within a month. This score signifies your reliability but takes time to establish.
A rating of R2 indicates that you had a late, 30-day payment. Simply put, this means you missed a payment. While this by itself is not conclusive, combined with other items on your credit report it could tell the creditor an opinion regarding your credit worthiness.
An R9 Credit Rating is bad debt, debt placed for collection; moved without giving a new address or bankruptcy. An unresolved R9 can harmfully affect your credit score and make gaining credit in the future very difficult.
If you have a collection account that's less than seven years old, you should still pay it off if it's within the statute of limitations. First, a creditor can bring legal action against you, including garnishing your salary or your bank account, at least until the statute of limitations expires.
Contrary to what many consumers think, paying off an account that's gone to collections will not improve your credit score. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law's editorial disclosure for more information.