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Rebuilding Credit After Bankruptcy!

Your ability to re-establish credit after filing bankruptcy is better than ever. After you get your bankruptcy discharge, you will receive many solicitations from lenders offering to finance homes, vehicles and credit cards. And....why not? Bankruptcy gets rid of debt and getting rid of debt is the first step for re-building credit. Getting rid of some debt puts you in a better position to handle more credit. In fact...many, many former clients have told us they started getting credit card offers right away...within weeks after their bankruptcy case was done. Here are some tips on how to rebuild your credit. Open a checking or savings account. And, start saving some money. You will need money for down payments. The more money you can pay down on a purchase, the lower the interest rate you will get. Establish a realistic household budget so that you have a clear understanding of how much debt payment you can handle.  Apply for store and gas credit cards that you would normally pay cash.  Evaluate the offers you receive based on the type of credit, interest rate, grace period, and annual fees so you know your exact obligations. Your applications should be focused and limited. A large number of credit inquiries caused by a flood of applications can lower your credit rating. Apply for a secured card where you deposit cash and charge against it. Make sure you only apply for secured cards with a company that promises to report regularly to the major credit reporting agencies.  They maintain your credit record. Think about it. What good does it do to get a secured card from a company that does not report to the major credit bureaus? Pay back advances in a timely fashion to build a track record of paying on time...so that they will be reflected as positive marks on your credit report. Pay your utility bills and rent on time. After filing bankruptcy...building up a history of paying on time is crucial. Find a friend or relative to cosign for you on a loan and pay it on time. But...be careful here. If you don't pay it or don't pay it on time....you will do significant damage to the credit record of the friend or relative who was kind enough to cosign for you. Look for car dealers and mortgage brokers that claim to be "bankruptcy friendly". Buy a used car so you do not get hit with the depreciation that occurs during the first two years of a new car purchase. Stay away from payday loans and finance companies that are at high interest rates and are a "bad credit" trap. These outfits will suck you dry and leave you back in debt. Write a letter to each credit reporting agency explaining the circumstances that lead to you filing. You are allowed to submit up to 100 words of explanation to each credit reporting agency.  Also send a copy of your discharge notice and copy of schedules of creditors. Live within your means. If you don't have the money....don't spend it. If it helps....Limit yourself to what you need...rather than....like in the old days that lead you deep into debt....when you bought everything you wanted...whether you needed it or not. And....as a rough guideline....try to make sure your payments on consumer debts don't exceed 20% of your expendable income.... after your costs for housing and a vehicle. Pay your remaining debts....left over from your bankruptcy....on time. This is worth repeating. This includes things like non-dischargeable taxes, student loans, car loans, truck loans, and house mortgages. This is crucial...if you want to reestablish your credit. Make sure the information on your credit report is accurate.  The best way to do this is to get an updated copy of your credit report.  After filing bankruptcy, it's probably a good idea to get an updated credit report every 6 months for a year or so.  How do I get a copy of my credit report?  The easiest way is to get it directly from one of the 3 major credit reporting agencies.  The best way to order your credit report is "online".  You can go to any of these websites: Equifax (http://www.equifax.com/) , Experian (http://www.experian.com/) and TransUnion (http://www.transunion.com/).  There is also other valuable information on these websites, including: (1) information to help you understand your credit score, (2) further information on how to rebuild your credit, and (3) information on how to fix any errors that may appear on your credit report. NEWS ALERT : After of 9/1/05, Indiana residents have a right to get one(1) FREE Credit Report per year.  "Click here" to find out more. Want even more information? These are some books that may provide more detailed information on repairing your credit. The Guerilla Guide to Credit Repair - By Todd Bierman, Nathaniel Wice Repair Your Own Credit and Deal With Debt - By Brett Sember The Complete Guide To Credit Repair - By Bill Kelly, Jr. Repair Your Credit- By George Williams III