What a consumer proposal does to your file
A consumer proposal is a legally binding arrangement, filed through a licensed insolvency trustee under the Bankruptcy and Insolvency Act, to repay a portion of your unsecured debt over up to five years. It stops collection calls, freezes interest, and lets you keep your assets. On your Equifax file it appears in two places: as an R7 rating on each account included in the proposal, and as a public-record entry for the proposal itself. Equifax generally removes the proposal three years after you complete it (or six years from filing, whichever comes first). Until then, it’s visible to every lender who pulls your report.
Roughly one Canadian household in every hundred is in a proposal at any given time, and the number has grown every year since 2020. If you’re in one, you’re in a very large group — and lenders have well-worn paths for approving people who come out of one properly.
The mistake almost everyone makes
Waiting. People finish the proposal, feel relieved, and do nothing with their credit for two years because “it’s on my file anyway.” But scoring models weigh recent behaviour heavily, and lenders look at what you’ve done since the proposal. A file that shows a completed proposal and then two years of nothing looks stalled — there’s no evidence that anything has changed. A file that shows a completed proposal and then 24 months of on-time payments on new accounts looks like a recovery, and gets approved. The three-year clock and the rebuild should run at the same time, not one after the other.
What the proposal closes — and why that matters
Most proposals include every unsecured account you had: cards, lines of credit, unsecured loans. Those accounts are closed and show as included. That means the day your proposal is filed, your file usually becomes thin as well as damaged: the negative marks are there, but the active accounts that used to carry your payment history are gone. Rebuilding therefore has two jobs — add a clean recent stretch, and add new accounts to carry it — which is why doing nothing is so costly.
Why new accounts are hard to get — and how to get one anyway
Most banks won’t issue an unsecured card while a proposal is on file, and a hard inquiry that ends in a decline makes things slightly worse. Two options don’t require a credit check at all:
- A secured credit card backed by a refundable deposit. The deposit sets the limit, so the issuer isn’t taking on your risk and doesn’t need to check your file. The AvenaCredit Secured Card takes a $250–$5,000 deposit and reports to Equifax as a second tradeline.
- A credit-building membership like AvenaCredit, where each monthly payment is reported to Equifax Canada as an on-time payment on a $1,000, $1,500 or $3,000 tradeline. Nothing is borrowed, so there’s nothing to approve — see how the reporting works.
Neither one asks about your proposal, and both start building the clean-history stretch lenders need to see from the first month.
A rebuild timeline after a proposal
- During the proposal. You can join AvenaCredit while still making proposal payments, as long as your trustee has no objection to new accounts — most don’t for a membership without borrowing, but ask. Get the clock started. Every month of on-time reported history that overlaps the proposal is a month you don’t have to wait for later.
- Completion. Get your certificate of full performance from the trustee and keep it. Within 30 days, pull your Equifax and TransUnion reports and confirm the proposal shows as completed with the right date, that every included account shows a zero balance, and that no collection agency is still reporting a debt covered by the proposal. Errors here are common and every one of them is fixable with a dispute and your certificate.
- Months 0–6 after completion. One or two reporting accounts, paid on time, every time. If you rent, get your rent on file — Build and Boost report rent and utilities monthly, and Boost members get up to two years of past rent added, which often pre-dates the proposal and gives the file a positive record that runs right through it.
- Months 6–12. Keep any card under 30% of its limit on the statement date. No new applications. Check the report again at month 12 and watch the direction.
- Month 12+. Members gain an average of 71 points after 12 months. With a year of clean reported history, many members qualify for a vehicle loan at a non-subprime rate and for an unsecured card with a modest limit. See the score you need for a car loan.
- Year 2–3. Mortgages with prime lenders usually need the proposal fully gone plus two years of clean re-established credit on at least two tradelines. Some alternative lenders will work with you sooner at a higher rate; a broker will tell you which. See the score you need for a mortgage.
What to check on your report, line by line
- Every account included in the proposal shows a zero balance and is marked as included. An included account still showing a balance is the most common error and it keeps dragging the score.
- The completion date is correct. It drives the three-year removal clock; a wrong date can keep the proposal on your file for extra months.
- No collection agency is reporting a debt that was covered by the proposal. If one is, send the bureau your certificate of full performance.
- Any account you kept out of the proposal — a car loan, a secured card — shows as current.
If anything is wrong, dispute it with Equifax directly, in writing, with proof. AvenaCredit’s dashboard tips walk you through the process, and Boost members get 1-on-1 guidance on what to dispute first.
What to avoid
- High-interest “bad credit” loans sold as credit rebuilding. Many don’t report positive history at all, and the interest is brutal. If you need to borrow, a small secured loan from a credit union is a better path.
- Applying to multiple lenders hoping one says yes. Each decline is a hard inquiry with nothing to show for it.
- Paying to “remove” the proposal. No company can remove accurate information. The proposal comes off on schedule; what you control is what sits next to it.
- Closing the secured card once you get an unsecured one. It anchors your post-proposal history. Keep it open.
Common questions
Can I really get credit during a proposal?
Borrowed credit is hard. A membership that reports payments without lending money is not borrowing, which is why it’s the usual starting point — with your trustee’s OK.
How much will my score go up?
It depends on the rest of your file. Members gain an average of 71 points after 12 months; people rebuilding from a proposal often see larger moves because they start lower and have fewer competing accounts.
Does paying off the proposal early help?
It starts the three-year removal clock sooner, which helps. It doesn’t change the rating on the included accounts.
Will lenders see the proposal after it’s removed?
No. Once Equifax drops it, it’s gone from the report. The closed accounts may remain visible for a while as closed, paid-per-proposal accounts, which is why the new positive accounts matter.
Proposal or bankruptcy — which is worse for credit?
Bankruptcy stays on file longer (six years after discharge for a first bankruptcy) and rates lower (R9). If you’re past a bankruptcy instead, read rebuilding after bankruptcy.
Not sure whether your file is thin, damaged or both? Read thin file vs. bad credit, then choose a plan and start the clean months now.