Many people wonder how to recover after a bankruptcy. This article will outline the information and steps needed to improve your credit score once bankruptcy is filed. There are many things that can be done today to help your credit score of tomorrow.
The first thing to do, if at all possible, is to avoid bankruptcy. If you are falling further and further behind with your creditors try to call them directly and make an arrangement that will work for both of you. Bankruptcy is rarely the best solution and it has long term negative effects.
If you have declared bankruptcy, try to maintain ownership of a piece of valuable property; like your automobile, home, or a piece of land. If you can manage to hold something of value through the bankruptcy process you’ll be much more ahead then if you didn’t. With your valuable asset you can borrow against it using a secured credit card. You agree to put the asset on the line if you fail to pay your bill. Apply for one of these cards as soon as possible. Make sure you always pay the balance in full each month. That way you build your credit and avoid interest payments too.
Sometimes using an asset to get a secured credit card isn’t an option. If this is the case, have a friend or family member cosign on a small loan or credit card with you. They agree to be responsible for any debt you have with the new account. You are putting their credit score and financial future at risk by having them sign with you. Be grateful and don’t over borrow. Even a small loan or credit card will do big things for your credit.
Be prepared to build for two to three years before you try for a bigger loan (like an automobile). If you have diligently paid your balance in full each month you’ll probably get a decent interest rate. If you already have a car or other large loan you can refinance to build even more credit and save more money. Bankruptcy and its negative effects stay on your record for ten long years. Just because you’ve declared bankruptcy doesn’t mean all is lost. After a few years of on-time regular payments you should start to see better interest rates. Lenders like to see that you are making a serious effort and that you are no longer a risk. Try to get back on the map with any kind of positive credit history.
Credit cards are a great way to start. If you have problems with credit cards but still want to build your credit, consider a prepaid card. These still report to the credit bureau and don’t have the same temptation as regular credit cards.
With all of this just realize that it will pass. Everyone has problems here and there so keep your head up. You can do it!
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