How to Rebuild Your Credit After Bankruptcy
The bankruptcy process is daunting, and most filers focus entirely on getting the bankruptcy process completed. But life goes on after filing for bankruptcy, and it is crucial to start immediately working on rebuilding your credit score.
Although bankruptcy remains on a credit report for years, one who has filed for bankruptcy can begin rebuilding his credit as soon as his bankruptcy is over. Getting a secured credit card and paying the balance in full every month is a good idea to improve one’s score after filing. Secured cards typically require cash to be deposited up to the amount of the card’s credit limit, and the debtor will be required to pay a yearly fee.
While this may not seem like a credit card and may appear like a hassle, the secured credit card will appear on your credit report as any other type of credit card. Making on-time payments and not having a balance on this secured card will positively impact your credit report. You may see an improvement in your credit score in as little as six months. Non-secured cards can be applied for about a year after filing for bankruptcy if your credit score improves. In addition, if the filer qualifies for a car loan or perhaps a furniture loan and continues to make on-time payments, the credit score will continue to improve.
Within two or three years of filing for bankruptcy, a filer who has taken steps to improve credit can typically expect to see their credit score increase. As you continue to make on-time payments, keep from holding balances on credit cards and begin to pay off debts, this score will continue to grow.
It is good to remember that credit reporting agencies focus on the most recent credit history within the last three to five years. When you establish a positive credit history and maintain it, your score will continue to strengthen. Make sure you check your credit report each year to see no errors. If errors are found, contact the credit reporting agency and rectify the situation.
It will be more challenging to obtain a new mortgage if you have filed for bankruptcy and have a home foreclosure on your credit report. The foreclosure remains on a credit report for many years, but as time passes, this will carry less weight on a credit report, provided that the filer has taken steps to improve the credit score. Usually, it takes up to four years to qualify for a mortgage again. Also, you must wait for at least two or more years after filing for bankruptcy before you apply for a new mortgage.
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