Rebuilding Credit After Bankruptcy
3 Ways towards Rebuilding Credit after Bankruptcy
Although you have to wait for 7 to 10 years for your bankruptcy filing to be removed on your credit report, you do not have to wait until that period is up to do something about your credit status. You can start rebuilding credit after bankruptcy in three ways:
* Establish a new line of credit.
You can still get approved for credit even after bankruptcy. The only thing is there will be some limitations. One option is to get a secured credit card, which is ideal for people who are rebuilding credit after bankruptcy. With a secured credit card, you open a savings account and the bank issues you a credit card with a maximum credit equal to your cash deposit. You can only charge up to the amount you deposited in the account. Keep the credit limit low at an amount enough for you to make small purchases and which will be easy to pay every month.
A car loan or a mortgage loan can also help you in rebuilding credit after bankruptcy. You may be wondering why lenders will be willing to loan you money for a new car or house after you have declared bankruptcy. The catch is the loans usually come with higher interest rates. In addition, mortgages and car loans are secured type of loans which are less risky for lenders since they may take away the car or the house should you fail to repay. You may also be considered somewhat less of a risk after declaring bankruptcy when most of your debt has been erased. Some things you should have to get approved are proof of a good steady income and sufficient money for the down payment
* Make timely payments.
The solution to rebuilding credit after bankruptcy relies on paying your bills on time. In fact, the whole point of applying for a secured credit card or a loan for the purpose of rebuilding credit after bankruptcy is to be able to show that you are capable of paying your obligations promptly and regularly, and, by doing so improve your credit standing.
* Save up.
Rebuilding credit after bankruptcy should not just be about becoming worthy of credit again but also developing the habit of saving money so that you do not always have to rely on credit to pay for your needs. Set aside as much as you can afford every month in a savings account. You can open an account for small unexpected needs and another account that can cover you for at least six months should you experience any major setback such as illness or job loss.
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