If you've been through bankruptcy, you probably think your credit is as shattered as Humpty Dumpty's shell. It may be, but the difference is you can put it together again.
Getting stuffs on credit after bankruptcy is quite difficult. You would likely end up paying higher interest rates if you can find it, and you could also be targeted by dishonest lenders who believe that anxiety makes you an easy target. In spite of the difficulties, there are simple things you can do to begin re-establishing your good credit.
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Here are ways to be who you were before and even better
1. Make a budget: Track your expenses for three months in order to get an idea of how much you're spending and where exactly the money is going to. Then create a good budget that fits within your monthly income. The first step to a healthy saving is to set boundaries on your spending.
2. Learn to love cash: People who have been through bankruptcy develop a depression-era mindset, but do not fear credit. There is need to re-establish credit after bankruptcy except if you plan to buy everything in cash. Even future landlords and as well employers will want to see that you have restructured credit after bankruptcy. Love money, but learn to manage and also respect credit.
3. Pay all your bills on time: Especially your bank, if you are bouncing checks, have overdrafts or are incurring bank fees, that will show up (on your credit report) as well, it is necessary you make amendments.
4. Watch your credit report: Haven been through a bankruptcy to acquire a clean slate, you need to ensure this is accurately reflected in your credit reports. You also want to control your finances and start making smart moves, which means observing your report regularly for errors. Most people are scared of credit because of the numbers, and they don't understand it. But you must know what people are seeing as they look at you.
5. Get a credit card: The best way (to establish good credit) is to get a credit card. It's ironic because the best way to help yourself is also the best way to damage yourself.
- Secured card: If all you can acquire is a secured card, shop for one which has the best rates and least fees. Get out a magnifying glass, and read all the fine print before you sign. Use it economically for six months to a year and then try to re-negotiate with the company for an unsecured card.
- Unsecured card: Even after bankruptcy, you may still be able to get a card. Some banks or lenders might actually consider you risk-free because you are not carrying any debt and may not be able to file a bankruptcy for years. But you may likely pay dearly for that privilege. Act like you would if you had lots of money: shop around. Check Bank rate’s search feature to find the correct card for you.
- Be careful so as not to apply for too many cards. Whenever you make an application for credit, and a creditor checks you out, it can possibly lower your credit score.
- Card tricks: In order to establish a better record of borrowing and repaying, you need to use your card. At the same time, you can’t accumulate the charges because you have to pay it off in full every month in order to show that you have truly reformed
6. Re-establish your credit through a line of credit: Your bank might offer a personal line of credit which can be secured by a savings account. This is known as a secured loan. While this may help re-establish your credit, the interest you pay on the line of credit will outweigh the interest you earn on the savings.
7. Suspend buying a car: I think that the problem people run into is their level of desperation. You can still apply for mortgages and other types of loans if you could show you are responsible and trust worthy. Merely waiting two years does not mean your credit score will advance. Future lenders would still want to see that you spent two years rebuilding a positive post-bankruptcy filing credit history.
8. Nurture those long-term relationships. The same is true for charge cards and credit relationships. While card hopping might help you keep a better rate, it will not do good things for your credit rating. But a long term record with 1 or 2 cards will help you build your credit.
9. Navigate clear of scams: Re-establishing your credit is quite a difficult work but it's something you can do yourself. It can’t be repaired overnight, and there are lots of scam-masters who will offer to help for a particular amount of money.
If someone needs money upfront or the offer seems hard to be true, be very careful. When you are in doubt, it is wise that consumers check with the state regulatory agency.