Bankruptcy is NOT The End! There Is Still Hope!
Written by Dongmiao Cui   



Rebuild Your Credit Score After Bankruptcy

Despite the damages, filing bankruptcy gives you the opportunity to restart building your credit scores. If you get to know the strategies step by step, you can bounce back faster.


Clearing Up Your Credit Report

Clearing up your credit report is a necessary step for you to rebuild your credit. Sometimes after the bankruptcy is filed, your credit reports still show closed accounts as “open” or “overdue”, or discharged debts as “delinquent”. These records will continue damaging your credit score until they are updated. So it is necessary for you to report these errors to the credit bureaus and make sure that they properly update these accounts as “included in bankruptcy”.


Obtaining Cew Credit Cards, especially a Secured Credit Card

Getting new credit cards is one of the most crucial steps for your credit to recover. In most cases, it is harder to obtain unsecured cards after recent bankruptcy. However secured credit card could be a good solution.

You typically have to deposit about $200 to $500 into your credit card account. The deposit creates an equal amount of credit limit. Then try to use your card regularly and maintain a light balance of about 30% of your credit limit. Don’t make the same mistakes if you used to max out your cards.

You also want to check with the issuing bank and see if, and when they regularly report to the three major credit bureaus (TransUnion, Equifax and Experian).

If you maintain discipline, you will be able to convert your unsecured card to a regular one within one or two years.


Getting Affordable Loans

Make on-time payments and even try to pay more than your debt if possible. Both are great ways to boost your credit score. In addition, student loans are usually not dischargeable for bankruptcy. Repaying your student loans can actually help you rebuild your credit.

Even though it is relatively harder to obtain mortgage within two years after your bankruptcy, you can still consider other types of installments such as auto loans. You may be able to qualify for auto loans as soon as a few months after bankruptcy. Bankers may be very cautious of your credit history; but businessmen sometimes are more eager to increase their sales.


Other Useful Tips:
  • Ask your friends or relatives who keep good financing behaviors, to add you to their joint account. You will benefit from including their account history in your credit report. At the same time, however, you will also become responsible for their mistakes or debt.
     
  • Being added as an authorized user to a credit card will not help you improve credit history any more. Credit scoring systems have ignored this information since lenders protested.
     
  • Have credit card accounts in big, major banks can also help you rebuild your credit.
Learn from mistakes and make efforts to build good credit throughout all your life. The only solution here is good habit, effort and time.


 

    

Last Updated on Thursday, 26 August 2010 03:27