Establishing Credit After Bankruptcy

Being bankrupt is not a very pleasant scenario, in any case - mentally, socially or financially. There is a major social stigma attached to bankruptcy and hence it is better to be thrifty, than being bankrupt. I guess most of you know that being bankrupt is to be financially crippled and hence being unable to pay creditors back. Still, there are circumstances where people are helpless and they go bankrupt. The solution to this is slow and painful and that is to establish credit post bankruptcy. The question, however is how do you do that? Don't worry, here are a few things you can do to establish credit after bankruptcy.

Rebuilding Your Credit after Bankruptcy

Organizing Your Finances
To establish or rather re-establish your credit after bankruptcy, you need to get a hold on yourselves, your life and finances. Be organized! Have a fair idea of your income, the expenditure and what steps you are going to take to re-establish credit after bankruptcy. Take stock of your fiscal condition. Keep a written record of these things. There is no problem in that if that makes you comfortable.

Pay Bills in Time
Once you go bankrupt and have scarred your image as a defaulter, it is important to build the trust again in the minds of the financiers, that you are not a threat to them now. This can be done with the help of a very primary step, that is paying bills on time. This will also help you add new credit whenever possible.

High Interest Loans
Another unfortunate thing to add to your woes is that if you want to take a loan, you would have to pay high interest rates. Although it is a blow to your finances, it will help you in showing that you can pay back responsibly and improve your credit score. Such loans will help you do that and will make things better in the long run. This is a major drawback while establishing credit after bankruptcy, but you have to grin and bear it.

Get Rid of Credit
Having credit is not a good idea after you go bankrupt. Even if many people want to have credit scores after bankruptcy and the consequent credit history, for some it is a big no-no. They abandon the world of credit all together. While it is a great idea to get used to living without credit cards, it is sometimes inconvenient when it comes to routine matters like booking tickets, renting a car and so on.

Get a Secured Credit Card
Okay, this might sound ironic to the earlier point, but this can also be done to get a grip over your credit after bankruptcy. Those who feel they might be turned down with regards to a normal credit card, this is a good option. It grants protection to the issuer, in case the cardholders are unable to pay back. But all said and done, credit history on a secured credit card is not necessarily reported to the credit bureaus. On the contrary, when it is reported, there is a stark possibility that the creditors might even be alerted of the problematic past credit, simply by seeing that it is a secured credit card. Thus, it is then it is up to the individual to decide what should he or she do.

In case you are all messed up and are clueless as to what to do in such a situation, approach a financial adviser. In short get professional help in establishing credit after bankruptcy. Working hard and being determined is going to help you sail you through and nothing else.

Moreover, you need not wait for your credit report to stop showing your bankruptcy, which is almost till 7 years after the bankruptcy. You can start working towards credit repair as soon as you see yourself in doldrums. It will take some time for potential creditors to see the improvement in your credit score and help you in establishing credit after bankruptcy. Still, go on as you have all the time in the world to make amends, right? Good luck!