It is possible to rebuild credit after bankruptcy; it is not the end of the world. But it will take hard work and a lot of commitment for this to be able to be accomplished. It is not going to happen overnight, and any companies that tell you they can rebuild your credit score quickly you should avoid, they are not going to help you at all and they might do further damage to your credit rating.
There are some tips that you can use to help to rebuild credit after bankruptcy and they are going to get you through some of the tough times ahead. It is important to rebuild your credit rating because this will mean that you are going to be in a better position financially and as a credit rating can affect most of your life and not just credit it is a great tool to get right. Your ability to rent a home, get a job, get insurance and further credit are all effected with your credit rating.
It is not going to be easy, but neither was filling for and going through the procedures that you will have needed to face to file for bankruptcy in the first place.
You must get a copy of your credit report and check that all the information on this is correct and up to date. Any mistakes need to be rectified and this can take time to get any information changed and updated.
Your bankruptcy note will be a public record under each section of your credit report. This information can stay on your credit report for 10 years but if you are using credit wisely then it could disappear sooner. The creditors that you are using are going to be more interested how you use your credit now and this will help to rebuild credit after bankruptcy.
If when you applied for bankruptcy and you had loans or mortgages that you hadn’t defaulted on then you need to continue working on these. You need to pay you balances on the day that they are due because this will prove that you are being responsible.
One of the most important facts that you should understand about your credit report, is that the figure is based on different aspects of your ability to pay but 35% is that you pay your amount due on the correct day and that you are not late in paying.
It is important that you use credit again because this is the only way that you are going to be able to rebuild credit after bankruptcy. You will need to learn how to use money first and some of the basic steps will be learning how to budget your money and how you save money too. Only once you feel that you understand money should you consider the next step of using credit.
You must start small and if you use a credit card then you must pay off the full balance each month. This will demonstrate your responsibility and help you build trust with creditors. If you spend more on a credit card than what you can afford this might lead you to get into more trouble and end up where you where before.
If you had a credit card before the bankruptcy and you still have them use them wisely. If you don’t have a credit card then you will need to think about the options of getting one. This can be difficult for a person with low credit score, and if you apply for too many this will affect your credit score too.
Secured Credit Cards
It is possible to get a secured credit card and this means that you normally have an account with money in that can be used if you default on the credit card payments. But you can’t use the money in the account and you can’t use the money to pay off the bill each month either.
You will need to check that whatever credit you are using to rebuild credit after bankruptcy that the company is giving feedback to the credit report companies each month. This will ensure that the creditors can see that you are trying to make the right choices every month and are being responsible with the credit that you have.
It is not going to be easy to repair a credit report and it is going to take time and a lot of time. It could be 2 years before you are eligible to apply for a credit card and it will be longer for a mortgage, up to 4 years. So you will need to:
- Work hard and have commitment
- Use a budget and stick to it
- Know that it could be 2 years before applying for credit card
- Understand that a minimum of 4 years will pass before the possibility of a mortgage.