Rebuilding Credit After Bankruptcy

Time is Your Credit’s Best Friend

Time is the biggest player in rebuilding your credit after filing for bankruptcy. The further in the past the bankruptcy filing is, the less damage it will cause to your credit score.

To “speed up” the rebuilding process, you will need to have a plan, work hard, and probably accept higher interest rates and fees.

So, unless you’re planning to make a major purchase on credit in the coming three to five years, you may want to consider the long route and just wait it out.

No Brainers!

Check your credit reports for accuracy

• Free at www.AnnualCreditReport.com
• Dispute any inaccuracies

Be a Good Record Keeper

• Keep list of all your debts that were discharged in bankruptcy.

Make ALL credit payments on time EVERY month

• These include mortgage, auto, cards, utilities, loans, club memberships, etc.

Do’s

Below are some suggestions for speeding up the rebuilding of your credit after bankruptcy. Keep in mind that each of these options carries fees and expenses that you may likely avoid if you can be patient and rebuild your credit over time.

Consider a small signature loan

• Check with your credit union or bank
• Make at least the minimum monthly payment, if not quite a bit more.
• Repay the entire balance due once the loan is listed on your credit report (usually after one to three months).

Consider a gas or a store card

• Also look into tire and repair shop credit
• Dental offices may also offer 3^rd-party credit

Consider applying for a secured credit card

• Check with your credit union or bank for this card (secured by a cash deposit) and that you can use as you would a credit card. However, they tend to carry high service, use, and other fees. Just make sure that the card company will report your history to one the credit bureaus.

Utilize your online utilities payments

• If you have a solid on time payment history with your utility companies, you might ask them to report that to the credit bureaus. They generally do not do so automatically, and some may not do it even if requested, but it could provide some additional positive activity on your credit history.

Don’ts

Avoid credit craze

• Don’t apply for a multiple lines of credit in a short period of time.

Don’t get sucked into a used car loan

• Many such offers begin to arrive in your mailbox right after bankruptcy, overcharging for the car and carrying interest rates into the mid-30%.

Avoid expensive alternatives to credit

• Payday loans, title loans, rent-to-owns, pawn loans, and tax refund anticipation loans can destroy your personal finances.

Beware of credit repair agencies

• The FTC warns that no one should offer to remove accurate information from your credit report, even if it’s negative information.

Don’t Blindly Trust the Decree

• Your divorce decree may indicate that you’re responsible for ABC while your ex is responsible for XYZ. But neither creditor ABC nor XYZ is a party to your divorce, nor are they likely to abide by the decree. Contact them directly to work out arrangements.

If you have any suggestions or stories on how you’ve experienced relief from credit cards and other debt feel free to share in the comment section below. Tips, tricks and other suggestions are always welcome!

1-877-OUT-DEBT (688-3328)

www.DebtReductionServices.org