How Long Does a Consumer Proposal Stay on Your Credit Report in Canada?

When debt becomes difficult to manage, a consumer proposal can offer real relief. It lets you legally settle unsecured debts for less than you owe while avoiding bankruptcy. One of the first questions Canadians ask is: how long does a consumer proposal stay on your credit report? Below, you’ll find clear timelines, what the R7 rating means, and practical steps to rebuild your credit, along with trusted resources.

What is a Consumer Proposal?

A consumer proposal is a formal agreement, filed through a Licensed Insolvency Trustee (LIT), where you repay a portion of your unsecured debts over a set period (typically up to five years). During the proposal, the stay of proceedings stops most collection activity, including wage garnishments and collection calls. For a deeper look at how proposals affect borrowing and long-term opportunities, see our guide on how consumer proposals impact your credit score.

To understand the basics of credit reporting in Canada—what’s recorded and for how long—review the Financial Consumer Agency of Canada guidance on credit reports and scores.

How Long Does a Consumer Proposal Stay on Your Credit Report?

In practice, most Canadians see a consumer proposal removed from their credit report three years after completion. Some credit bureaus also apply a maximum retention period measured from the date you filed or the date of default; depending on bureau policies, it may be up to six years from filing. Policies can evolve, so it’s wise to check your own reports directly and confirm removal timelines.

Key points to remember:

• The proposal typically appears as an R7 rating (repayment under special arrangement) on affected accounts.
• The countdown for removal commonly starts when you complete the proposal, not when you file it.
• If a proposal is annulled (for example, due to missed payments beyond the allowed threshold), negative information may remain longer because accounts could be reported as delinquent until resolved.

For comparison and additional context, you can explore how long a loan stays on your credit report, which helps frame reporting timelines across different credit products.

When the Clock Starts (and Why It Matters)

Most Canadians complete consumer proposals within three to five years. Once you receive your completion certificate, credit bureaus begin the clock for removing the proposal entry (typically three years after completion). If you pay your proposal off early—say you increase payments and finish in 18–24 months—you’ll generally see the reporting period end sooner.

Because lenders often check recent history, the months immediately after completion are prime time to establish positive new credit behaviours (on-time payments and low balances) that steadily improve your score while you wait for removal.

Provincial Differences and Bureau Policies

Credit reporting in Canada is governed nationally, but individual bureaus (such as Equifax and TransUnion) maintain their own retention policies. Factors that can influence removal timing include whether the file is marked as settled, the date of last activity, and the bureau’s current rules. There aren’t province-by-province rules for consumer proposal retention; instead, the variance is mainly between bureaus and how accounts are updated. For authoritative guidance on your rights, visit the Financial Consumer Agency of Canada.

How Long Does It Affect Your Credit Score?

While a proposal is active—and for a period after completion—your score may be lower because the R7 rating signals a repayment arrangement to lenders. However, well-managed credit after the proposal can lead to meaningful score improvements within 6–12 months and continued gains over time. The most important credit scoring inputs are:

• Payment history: Paying every bill on time has the biggest positive impact.
• Credit utilization: Keeping balances under 30% of limits (ideally under 10–20%).
• Length of history: Older, well-managed accounts help over time.
• Mix of credit: A small number of responsibly managed accounts (e.g., a secured card and an instalment product).

For a full comparison of how proposals stack up against bankruptcy on your report and future borrowing, see Bankruptcy vs Consumer Proposal: Complete Canadian Guide (2025).

A Practical Example

Imagine Kari files a consumer proposal in June 2022 and completes it in May 2024. Her proposal entry is typically removed by May 2027 (three years after completion). If Kari proactively rebuilds—getting a secured credit card, paying on time, and keeping balances low—her score can begin recovering within months of completion, often long before the proposal disappears entirely.

Steps to Rebuild Credit After a Proposal

You don’t have to wait for the proposal to drop off your report to start improving your score. Smart steps taken during and after completion have a compounding effect:

• Confirm completion: Keep your Certificate of Full Performance in a safe place. It’s useful if you need to dispute inaccurate reporting.
• Use a secured credit card wisely: Charge a small amount monthly and pay in full by the due date to build positive history.
• Keep balances low: Aim for 30% utilization or lower; lower is better.
• Automate payments: Automatic transfers reduce the risk of missed or late payments.
• Monitor reports regularly: Obtain and review your credit reports from each bureau to catch errors early. The FCAC provides guidance on obtaining your credit report and disputing inaccuracies.
• Build an emergency fund: Even a few hundred dollars helps you avoid high-cost borrowing for unexpected expenses.

If your debts were triggered by a job loss or rising household costs, you may also find targeted strategies in our insights on debt management after job loss and managing debt during food inflation.

Build New Positive Trades (Without Overborrowing)

One or two new trade lines—such as a secured card or a small instalment loan—can demonstrate responsible behaviour. Keep the number of accounts modest and avoid multiple applications in a short period, which can add hard inquiries and potentially lower your score temporarily.

Payment History and Monitoring: Your Two Biggest Allies

Payment history drives your score. If you do nothing other than pay every bill on time—utilities, phone, internet, secured card—you’ll see consistent improvement. Pair that with regular monitoring to dispute errors or out-of-date entries quickly. The Financial Consumer Agency of Canada explains how to request your credit report and dispute items.

Borrowing While In or After a Proposal

Lenders differ in how they view consumer proposals. Some will consider applicants with a completed proposal, solid employment, and a year or more of clean payment history. Others may require two years post-completion or set higher interest rates initially. If you’re considering consolidating debt instead of filing a proposal—or you want to plan for future borrowing—review debt consolidation benefits and risks and how your credit score behaves after a consolidation loan.

Remove Errors and Keep Your Report Clean

Occasionally, a creditor may fail to update an account after your proposal completes, or a bureau may list the wrong completion date. You can submit a dispute directly to the bureaus. Attach your completion certificate and any supporting documents showing the account is settled. For general dispute steps and consumer protections, refer to the FCAC’s credit reporting guidance.

Consumer Proposal vs Bankruptcy: Credit Report Differences

Both consumer proposals and bankruptcies signal financial distress to lenders, but they’re treated differently. A proposal generally carries an R7 rating and is usually removed three years after completion. Bankruptcy often results in an R9 rating, with different retention timelines depending on discharge details and bureau rules. For a detailed comparison of outcomes and timelines, see our complete guide to bankruptcy vs consumer proposal.

Wider Economic Context: Why More Canadians Are Using Proposals

Inflation and higher interest rates have strained household budgets in recent years, increasing the number of Canadians seeking formal relief. For data on national trends, visit Statistics Canada. If you want mid-year analysis of where debt relief is heading and what solutions are gaining traction, review our outlook in Mid-Year Market Trends Canada 2025.

Key Takeaways

• A consumer proposal typically stays on your credit report for three years after completion; some bureau policies cap retention at six years from filing.
• The R7 rating reflects a repayment arrangement; consistent on-time payments and low utilization can help you recover well before the listing is removed.
• Early completion and immediate positive credit behaviour (secured card, automated payments, low balances) accelerate score improvement.
• Check your credit reports regularly and dispute inaccuracies using guidance from the Financial Consumer Agency of Canada.

Conclusion

A consumer proposal is a practical path out of unmanageable debt, and its impact on your credit report is time-limited. While the R7 rating and retention period can feel daunting, they don’t define your financial future. With disciplined payment habits, careful use of credit, and regular monitoring, most Canadians see meaningful credit score improvements within a year of completing their proposal—and a clean report not long after.