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Coming Back From The Abyss - Improving Your Credit Score After Declaring Bankruptcy
Category: FinanceYou’ve dug yourself into a hole of financial debt you can’t seem to get out of. What is the fastest solution to solve these problems? File for bankruptcy, what else? So you’ve declared bankruptcy and suddenly all your debts are gone. They all seem to have vanished into thin air and all your problems are solved. Hooray, right? Think again. Declaring bankruptcy may be the easiest and quickest way out but it’s also the surest way to give you a bad credit score or record. Bankruptcy will be on your credit record for 10 years and will make it difficult, almost impossible for you to get a good loan or credit line.
But rebuilding credit after bankruptcy is not as hard as it seems. It might actually be a good opportunity for you start over with a clean slate. The thing is you must resolve to learn from your mistakes if you really want to rehabilitate your credit score. Bankruptcy may actually help you get a better perspective of your method of managing money, and ultimately your priorities. There have been many accounts of people rising above the ashes of bankruptcy stronger financially and more mature in their decisions.
The first step towards rebuilding credit is to make sure you are prompt in making payments to loans and credit cards. This applies to you if you are able to reaffirm a loan against your car or home. However, if you are unable to secure this type of loan, you should look around for a lender who is willing to take a risk with you despite your low credit score. If you don’t find one, you might consider taking on a secured credit card. In order to re-establish your credit score you need to start building a history of good credit standing.
It might take 2 to 3 years to repair your credit score but by being meticulous in your payments and making sure you do them on time, you will not only have a good credit score in the 700s, you will also learn though practice how to manage your finances better.
Here are the fastest ways to jump start your credit score:
- Damage control
All accounts included in the bankruptcy are listed as such. If the account is still perceived as delinquent, your credit score will suffer. Make sure everything is well documented otherwise credit score recovery will not start.
- Get new credit cards
It is very important to start re-establishing your credit standing by securing a credit card. If you can’t get a regular one, get a secured one. Credit cards are the most manageable type of loan you can wet your feet with. Just make sure you pay on time.
- Piggyback
Try to get a family member or a friend to help you co-sign a loan or credit card. Your credit score will improve if you pay your bills promptly.
- Bigger loans
A few months after bankruptcy you can start looking around for car or housing loan. The bigger your loan, the bigger your responsibility, and the higher your credit score.
F Stewart develops personal finance software to help youth and adults better understand credit. CredMedic is a free software application that includes a credit calculator, creditor database, and personal finance information. More information is available at http://www.CredMedic.com
Tags: bankruptcy, credit history, credit report, credit score, personal finance, credit