Sabtu, 04 Februari 2012


Bankruptcy, a curse to your financial records does reduce your credit score to a great extent. However, the good news is, it is possible to get credit after filing for a bankruptcy. You need to know how to do it. No doubt bankruptcy wrecks your credit score and you would suffer its consequences like, not being able to purchase things on credit. You can still qualify for mortgages and loans with excellent terms and rates long before the red mark is removed from your credit report. You can improve your credit score after bankruptcy by following a few simple steps which are mentioned below.

Everything is Temporary
If you are bankrupt, you need to remember that nothing is permanent and nothing remains forever. Legally speaking, a bankruptcy can remain on your credit rating for as long as 10 years. However, the effects of the same may start diminishing from the day your case is closed. But then you need to responsible with credit, so pay your bills on time. Moreover, you will have to start using credit judiciously, so that you can build up your credit score. A good option can be paying your credit card bills through cash.

Getting Your Credit Report Right
One of the most common difficulty faced by the people who would like to improve credit score after bankruptcy is that, the credit reports show their accounts as still overdue and open, when in reality the obligations were closed as a part of bankruptcy. If you face the same problem, you should bring this to the notice of the credit bureau and insist that they be accurately reported. Your credit score is entirely dependent on this report, so any errors can have a damaging effect.

Try for a Secured Credit Card
If you want to rebuild your credit scores after bankruptcy quickly, you should try to get a credit card. However, you would have difficulty qualifying for an unsecured credit card after a bankruptcy. So the best answer to that would be to apply for a secured credit card, in which the credit limit would be equal to the amount you deposit with the bank. Usually, the deposit amount would be about US $500. It may seem a small amount, but the basic purpose of getting a credit card at such a point is to improve the credit score. Ensure that you don't use all your available credit as it would hurt your credit score again and don't over withdraw, so that you are able to pay off your balance every month.

Don't just apply for a secured credit card, look for a card which has no application fee. There are some secured cards which charge huge annual and upfront fees which are not required for building credit. You would not do any good to your credit score until the history of your payments are being reported to the credit bureaus. Ask the issuing bank if your payment history would be reported to all the three rating agencies. After you have paid your bills on time for a year to 18 months continuously, convert them to unsecured credit card.

Try Getting a Loan
A student loan is the best bet if you are looking to improve credit rating after bankruptcy as these loans are not discharged when you file for bankruptcy. Pay all the installments on time making sure that you pay them every time. Moreover a thumb rule is that you should try paying more than the amount you owe as and when possible. On time payments coupled with paying more of your debts are some of the best ways of improving credit score. If you don't have a current student loan, you can opt for a car loan after bankruptcy to rebuild your credit, but be prepared to shell out high rates first. But you have to wait a few years to get approved for these loans. If you keep paying your installments on time to repay the loan, as and when granted, for about a year to year and a half, you can refinance it and purchase another auto loan at a lower rate of interest. If you opt for this route, make sure to pay a big down payment besides choosing one which does not have prepayment penalty. In the mean time, you must ensure that you pay your bills on time, so that you can improve your credit ratings.

Thus, by making your payments on time and not overdrawing more than the limit you can improve your credit score after bankruptcy. Hope, you have got an idea on the necessary steps you have to take so that you get into the good books of credit bureaus.

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