Your ability to re-establish credit after filing bankruptcy is better than ever.After you get your bankruptcy discharge, you will receive many solicitations from lenders offering to finance homes, vehicles and credit cards.And….why not?Bankruptcy gets rid of debt and getting rid of debt is the first step for re-building credit. Getting rid of some debt puts you in a better position to handle more credit.In fact…many, many former clients have told us they started getting credit card offers right away…within weeks after their bankruptcy case was done.
Open a checking or savings account.
And, start saving some money. You will need money for down payments. The more money you can pay down on a purchase, the lower the interest rate you will get. Besides….Lenders may look how you handle a checking and savings account as one indication of whether or not you can responsibly handle money.
Apply for a secured card where you deposit cash and charge against it. Make sure you only apply for secured cards with a company that promises to report regularly to the major credit reporting agencies. The major credit reporting agencies are Equifax (www.equifax.com) , Experian (www.experian.com) and TransUnion (www.transunion.com). They maintain your credit record. Think about it. What good does it do to get a secured card from a company that does not report to the major credit bureaus? Pay back advances in a timely fashion to build a track record of paying on time…so that they will be reflected as positive marks on your credit report.
Find a friend or relative to cosign for you on a loan and pay it on time. But…be careful here. If you don’t pay it or don’t pay it on time….you will do significant damage to the credit record of the friend or relative who was kind enough to cosign for you. However, this person can help you to get new credit, something that is hard to have alone when you just filled bankruptcy.
Live within your means. If you don’t have the money….don’t spend it. If it helps….Limit yourself to what you need…rather than….like in the old days that lead you deep into debt….when you bought everything you wanted…whether you needed it or not. And….as a rough guideline….try to make sure your payments on consumer debts don’t exceed 20% of your expendable income…. after your costs for housing and a vehicle.
Pay your remaining debts….left over from your bankruptcy….on time. This is worth repeating. This includes things like non-dischargeable taxes, student loans, car loans, truck loans, and house mortgages. This is crucial…if you want to reestablish your credit.
Make sure the information on your credit report is accurate. The best way to do this is to get an updated copy of your credit report. After filing bankruptcy, it’s probably a good idea to get an updated credit report every 6 months for a year or so. How do I get a copy of my credit report? The easiest way is to get it directly from one of the 3 major credit reporting agencies.
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