Credit after Bankruptcy

Credit after Bankruptcy
Listed below are the most popular ways of rebuild your credit after having filed for bankruptcy:

Credit Card after Bankruptcy
Apply for an unsecured credit card. Should you receive an unsecured card, use it for necessary purchases only and pay it off diligently. Always leave 50% of your available credit limit open to help quickly establish a decent credit score.

Secured Credit Card or Loan after Bankruptcy
Apply for a secured credit card. Your bank will require you to make a deposit in the amount of the credit available on the card. If you find yourself in this position it may be to your advantage to apply for a secured loan. Ask your banker to lend you money based on the deposit that you have made.

Installment Loan
Make sure that the loan is an installment loan, lasting 12 months or more. This will ensure that the loan is reported to the credit bureaus. Also talk to the banker to determine the lowest amount that they will lend. Some banks will not lend less than $10,000 in an installment loan. Small local banks often have lower installment loan limits.

Multiple Credit Lines after Bankruptcy
Don't apply for several credit cards at once when attempting to build your credit score. Multiple credit inquiries reflect negatively on your credit rating, further lowering your credit score.

Open checking and savings accounts to show creditors that you pay your bills and have cash available.

Obtain a credit card from a major department store that reports to credit agencies. Make small purchases and pay bills promptly. It won't help improve your credit score if the department store account you have doesn't report to the nations 3 major credit bureaus.

Credit Repair After Bankruptcy
Using credit wisely is essential to repairing credit after bankruptcy, as well as maintaining your credit score and your overall creditworthiness. It is important to keep all of your lines of credit in good standing so that you can quickly apply for more credit which will increase your credit rating.

Guidelines for Rebuilding Credit after Bankruptcy
Here are a few general guidelines to follow when rebuilding credit after bankruptcy.

Use your available credit only when cash is not acceptable, for example, use your credit cards to reserve hotel rooms or make airline reservations. Using credit to buy items you don't have cash for can put you back on the road to bankruptcy.
Pay bills on time to maintain a good credit history, and always pay more than the minimum payment. You should actually attempt to pay the total balance.
Keep the balance on your credit cards less than half of your available credit limit. If your balance is close to the available limit, your credit score may decrease.
Pay your mortgage on time, and be sure to never pay your mortgage more than 30 days past due.
Request your Credit Report
Creditors use credit reports to decide whether to extend credit. Many credit reports are rife with errors, so as you begin to re-establish your credit score, request a copy of your credit report on a regular basis from a credit reporting agency and review it for accuracy.

Be sure to dispute any inaccuracies that are on your report. Also, be sure that your credit report stays current and reflects accounts that are in good standing.

You also shouldn't just grab any secured card. Look for the following:

No application fee and reasonable annual fee. Some secured cards tack huge upfront and annual charges onto their accounts; you don’t need to pay these to build your credit.

Reports to the major credit bureaus. You’re not doing your credit score any good unless your payment history is being reported to the three major bureaus: Equifax, Experian and TransUnion. Call and ask if the card issuer regularly reports to all three before you apply.

Converts to an unsecured card after 12-18 months of on-time payments. Good behavior should get you upgraded to a regular credit card within a year or two.



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