After declaring bankruptcy you may feel hopeless, your credit score has taken a nose dive and nearly everything from finding a job to renting an apartment is based on credit. While we cannot say that it will be easy to fix things, the good news is with a little self control, patience, and responsibility you can and will have good credit again. Even before the bankruptcy mark falls off your credit report, your credit score can be built up to as high as 750, it will take hard work and you will have to begin immediately after your bankruptcy is over but it can be done.
After you've received the official notice from the bankruptcy court, you can start re-establishing credit with a secured credit card from a local credit union or bank. Many people choose to avoid using a credit card after bankruptcy because they are afraid to fall into the same old habits but secured credit cards are a lot different than their traditional counterparts. A secured card is similar to a prepaid card. We here at CreditCardsProfessor.com feature an entire section dedicated to secured credit card options. There you will be able to compare cards and find the one that best suits your needs.
With a secured credit card, you give the bank some money to hold on to and the bank gives you a credit equaling that amount. The higher the limit and the lower the balance on the card, the faster your credit score will improve. Most banks report the card to all three major credit bureaus but some do not. So make sure that you check with the bank before you sign up for a card and always be aware of fees associated with the card.
The general idea is to build up good standing with the bank or credit union you're dealing with so they will eventually approve you for an unsecured credit card. Sometimes it will take as much as one to two years of good payment history before they will offer you an unsecured card but most of the times they approve you much sooner than that. Either way, the secured card will be reflection positively on your credit score if used responsibly.
You may start to receive credit card offers after you have filed bankruptcy and some of these are likely to be unsecured. If this happens don't be afraid to jump right in but as always read the fine print and be particularly careful about upfront fees. Use the card to make several small purchases, making sure to pay off all purchases you make right away. Do not use the card unless you know you can completely pay off the purchase before the end of the billing cycle. Paying off your balance in full each month, or at the most a few months, will greatly improve your credit score and will help you avoid unnecessary interest. If possible you should request a credit increase every 12 months because the larger your limit is the better it looks on your credit report.
Avoid applying for retail, gas, or even traditional credit cards before you've rebuilt your credit. Unless you are guaranteed approval this will only get you a credit inquiry on your credit report which hurts your recovery attempts and your ego.
Once you've really started to re-establish your credit it is a good idea to apply for an affordable installment loan such as a car loan or student loan. When looking for a loan, try to avoid high-interest, high-fee finance companies since they will not help your credit report as much as a loan from a bank or credit union. It might be difficult to find a lender at first so be sure to give your credit plenty of time to recover before you start applying. Once you've signed a loan make sure you make your payments on time and in full. Never take out a loan you are uncertain you will be able to pay off because the last thing you need after a bankruptcy is too fall behind on your bills. If you can't easily fit payments into your budget, then just avoid taking out a loan all together.
The road to complete credit recovery after bankruptcy is long and full of potential missteps. Once you've started to recover you will almost certainly be tempted to fall back into old habits but you must stay strong and remember to always consider what effect your decisions will have on your future. By following these simple steps you can reestablish yourself with mainstream lenders and show future lenders that you have learned from your mistakes and that you are responsible and reliable, but if you do not control yourself and your actions it will all be for nothing.
Now is the time to get a handle on your life. You have already taken the first step by applying for bankruptcy. Now take a few more and build the kind of credit score you can really be happy with. It's all up to you.
Click Here to Apply for a Secured Credit Card With Zero Interest
| < Prev | Next > |
|---|
