Rebuilding Credit after Bankruptcy - Tips and Suggestions

By: Judy Dixon

Individuals, who have filed for bankruptcies, find rebuilding credit status a very difficult activity, after the bankruptcy has been dealt with. Itís important to rebuild credit after coming out of bankruptcy, since account details are flagged for seven years right after the inception of bankruptcy. One might experience certain financial hardships, especially when it comes to availing loans and credit facilities from creditors. At times, individuals often feel getting fresh or new credit after Chapter 7 bankruptcy or Chapter 13 bankruptcy is next to impossible. The primary reason why this happens is because:

ē The bankruptcy leaves a negative impact on your credit score and ratings for as long as seven years.

ē The credit scores and FICO takes a beating during and just after bankruptcy. So creditors donít feel like sponsoring an individual who has bad credit history and poor ratings.

The basic issue is file for bankruptcy can lead to long time repercussions, and that comments related to bankruptcy remain on the credit report for as long as ten years, and the related negative information for nearly seven years. However, itís possible to correct the situation, and rebuild the credit status and ratings even after the bankruptcy. Typically, when a creditor reviews a credit application, itís checked for steady employment history, low delinquency status and levels, a good history of monthly payments, and the overall status of the savings accounts. The following tips can help the individual rebuild the credit status after being bankrupt:

ē Secured credit cards: Itís possible to reestablish the credit ratings by applying for a secured credit card. This can be done by creating or setting up a savings account within a reputed bank that offers secured credit card facilities, and later applying for a credit card.

ē Unsecured credit cards: A few banks offer unsecured credit cards facilities. In such cases, no deposit needs to be deposited, to avail the facilities. It can be a very good option in reestablishing new credit ratings. In order to qualify, one needs to be employed, and provide identity as well as residence proof in the form of telephone or utility bills. The individual also needs to have a certain fixed monthly income. The credit history should not include any recent derogatory entries or comments within the past six months.

ē Merchants: Filing a bankruptcy is not advisable, as itís guaranteed to affect the credit ratings. The local merchants can help in reestablishing fresh credit ratings. Itís possible. One needs to find out whether they report all payment activities to a credit bureau, and in the event they do, carry out transactions with them. If the merchants approve the purchase activity, one need to pay off the itemís cost within 90 days. By carefully carrying out certain calculated transactions every month, itís possible to control the credit history. And one can improve upon the credit ratings, by exhibiting good quality transactions.

ē Automobile: Certain dealers specialize in selling cars to individuals who have faced bankruptcy, or possess bad credit ratings. So one can possibly check out the telephone directory, or alternately look out for advertisements of car retailers and dealers who specialize in such issues. One should be prepared to pay big deposits, and higher interest rates. The automobile bought functions as collateral for the loan availed. Since the credit facility is associated with high interest rates, many dealers might be interested in helping out. One need to ensure all payments is made on time. Timely payments can help build good credit reports.

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Amongst bankruptcies, debtors usually opt for Chapter 7 bankruptcy and Chapter 13 bankruptcy, since they provide the maximum benefits. BankruptcyOnly is the Web site where you will find a trusted bankruptcy attorney who will help you make the bankruptcy decisions that are right for you.

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