Debt relief and your credit go hand in hand. Options like debt consolidation, a consumer proposal, debt settlement and bankruptcy can all ease the pressure of what you owe – but each one leaves a different mark on your Equifax and TransUnion reports. FixMyCredit.ca is a free referral service – not a lender, debt counsellor or insolvency trustee – that connects you with trusted partners to explain your options and help you rebuild afterward.
Not sure which option protects your credit best?
How Debt Relief Affects Your Credit Score
- Debt consolidation loan: one hard inquiry and a new account, but moving balances off maxed-out cards can lower utilization and help over time. See debt consolidation and your credit.
- Consumer proposal: filed through a Licensed Insolvency Trustee; marked R7, stays about three years after completion. More on consumer proposals.
- Debt settlement: usually reported R7 – lowers your score but less than bankruptcy.
- Bankruptcy: heaviest impact – R9, six to seven years. See rebuilding after bankruptcy.
Which Option Has the Smallest Credit Impact?
Generally, a debt consolidation loan you repay on time does the least damage, followed by a consumer proposal, then debt settlement, with bankruptcy having the largest and longest effect. The right choice depends on how much you owe, your income and your goals – the kind of thing a qualified partner can walk you through for free. A debt management plan is another option to compare.
How to Rebuild Your Credit After Debt Relief
- Open a secured credit card and pay the balance in full every month.
- Keep utilization under 30% of your limit.
- Make every payment on time – payment history is the biggest factor in your score.
- Check your Equifax and TransUnion reports and dispute errors.
How FixMyCredit.ca Can Help
Tell us a little about your situation and we will connect you with a trusted Canadian partner who can review your options and help you rebuild – at no cost and no obligation. For free guidance, visit the Financial Consumer Agency of Canada.
