How To Go About Rebuilding Credit After Bankruptcy

If you are looking into rebuilding credit after bankruptcy then you should be aware of what the process of credit is, and how bankruptcy affects your credit. Rebuilding your credit after bankruptcy can be a long process and it can take even longer if you don’t know what you are doing. We’ll go over what you need to know to begin the process and what sort of milestones that you can expect by going through certain processes to rebuild your credit, as well as what not to do if you want your credit score to come back up and lenders to offer you credit after a bankruptcy.

The first step in rebuilding credit after a bankruptcy is to get some sort of credit established, assuming you don’t have any debt left on your credit report that wasn’t included in the bankruptcy. If so, take care of that first. Now, the bankruptcy will stay on your credit for ten years, but that doesn’t mean that you can’t start building credit again. In fact, the sooner you start to build credit the faster your credit score will rise again. You’ll have trouble getting someone to take a chance of offering you credit with a bankruptcy in your credit file but there are options available.

Secured credit cards are great for credit rebuilding, because you can get one from most companies without even a credit check, or least in spite of a credit check. How these work is that by depositing money with the secured card company you get a credit limit of the same amount and can use that amount, paying it off each month as if it were an unsecured credit card. If you don’t pay the credit card bill in the grace period you are subject to late fees and interest and over the limit fees as well if you use the card over the maximum allowable limit.

However, the nice thing about the secured credit card is that the money that you deposit will be returned to you usually in a year after making good payments. Also,  you should try to make sure that you find a secured credit card company that reports as a regular credit card and not a secured credit card. The reporting times vary, but most companies will report each month or every three months. One thing that you’ll want to keep in mind however, is how many bureaus that they report to. There are three credit bureaus and future lenders may pull your report from any of the three in the future so make sure the secured card reports to as many as possible.

So, there is life after bankruptcy. Get the debt paid off that wasn’t included in your bankruptcy and then begin to build your credit with a secured credit card. After a few months to a year you shouldn’t have any problems getting a store credit card. You can then make the payments on these two accounts and these stepping stones should take you to a place where you can get a car loan and a mortgage. However, you’ll want to make sure that you have the income and job history to back it up as well as making sure that your debt to income ratio is lower than thirty percent.