Personal bankruptcy rates fluctuate, but always remain at fairly high levels. If you have gone through bankruptcy and are finally serious about getting your credit and finances in order, you may be wondering how long it will take for your credit rating to get back to a level where you can get better interest rates on mortgages and car loans.
If people have had poor actions that have led them down the path of bankruptcy, all is not lost. Credit repair after bankruptcy is not only possible, it's critical for the individual to accomplish or they will continue to only tread water. Bankruptcy allows people to have a new fresh start by wiping all of the debt away and begin to project a positive credit history.
It is not a good idea to immediately apply for unsecured lines of credit. You are likely to get rejected at best, which will show up on your credit history, and keep your credit score low. You might get accepted, but you will probably pay much higher fees and interest rates. One thing to consider is getting a secured credit card, where your credit line is determined by depositing cash into your account as collateral.
Even with good use of your finances, it can up to ten years to get your credit back to a normal level. It may seem like a long time, but the benefits can be tremendous in terms of money saved. And when you consider that you have just had your big debt balances erased by bankruptcy, this is still a better situation than before your bankruptcy.
How To Repair Your Credit After Bankruptcy
Now don't hit your computer screen, but now that you are starting over, it is a great time to get a realistic financial picture, and that includes making a budget. I know, it makes my eyes glaze over, but once I knew where my money was going, I could make my financial goals come true. Without it you will just drift and make no progress.
Secondly, be sure to pay yourself first. Put money aside so you cannot easily get to it. Then plan out your purchases. Sure, have a little cash for impulse buys, but if you stay disciplined, you can avoid most of them as you see your finances improve and you feel the sense of accomplishment and independence your are achieving.
If impulse buying was what got you into trouble before, find a way to short circuit that tendency. Aren't at least a little mad at yourself and the finance companies for your previous debt problems? Resolve to keep them out of your life this time. One good trick is to wait a day to buy that thing you think you just have to have. You will find that almost always the urge goes away.
Lastly, find a spiritual outlet. Get in touch with that part of you that knows more things won't bring you lasting satisfaction. As you resolve to live more genuinely, and treat your finances more maturely, your credit will automatically improve after your bankruptcy, and before you know it, your credit score will be back toward normal.
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