Credit After Bankruptcy

Despite what you may have been told, credit after bankruptcy doesn't have to take ten years. You can start building your credit right away and be in good standing in as little as two years.

The first thing you need to do is fix the problems that got you into troubled waters in the first place. If one problem was overspending then it's time to build a realistic budget and spend within what you make monthly. If you had lost your job and not been able to pay for things, then let's work on building up an emergency fund. The last thing you want to do is take the time to build up a strong financial history only to end up in another financial crisis and having to declare bankruptcy again a few years down the line. The next thing to do is check your credit report for mistakes. Your score is based on information in the report. You want to make sure that everything included in the bankruptcy is marked as such. If not, you need to call the company and keep calling until this is changed. Accounts marked as open or overdue will hurt all of your positive efforts so it's important this is taken care of. Once these problem areas are taken care of you'll want to focus on building up a positive history. There are two ways you want to do this: installment payments and revolving payments. Installment payments would be some kind of loan, like for college, a car, or a mortgage. Revolving payments are credit cards or home equity lines of credit. If you didn't discharge a mortgage loan, then you are set! Just remember to make timely payments. Otherwise, consider an auto loan or other financing options. For revolving payments, if you aren't interested in securing home equity lines of credit, then I suggest looking at secured credit cards. These work just like other cards, with monthly payments, but you put a few hundred dollars into an account for the length of the card, typically 12-18 months, and that money secures your card. You can usually find these at your bank.

There are some important things to keep in mind when searching. Only use 30% of your credit limit and always pay the card off in full every month. Call the company before you apply and make sure they report to the three major bureaus, Experian, Equifax, and TransUnion. If they don't the card does you no good.Make sure the card will become unsecured after 12-18 months of timely payments.You should NOT have to pay an application fee and the annual fee should seem reasonable. You may want to compare fees at several banks.

With all of this going for you, after two years you should be in good standing. Even though past problems won't fall off your report for a good deal longer you can still have good credit after bankruptcy.