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Rebuilding Credit after Bankruptcy - 3 Things to Know

by Carrie Reeder

Now that you’ve filed bankruptcy and gotten rid of all of your debts, you want begin rebuilding your credit. Regardless of your reasons for filing bankruptcy -- doctor bills, divorce, job loss, or even just carelessness -- the best way to prove to lenders that you don’t want to end up in the same situation again is to build new, good credit. This article discusses three things you need to know about rebuilding credit after bankruptcy:

You Can Get Credit

There’s a myth about bankruptcy that makes people think that, after they file bankruptcy, they won’t be able to get approved for any credit loans until that bankruptcy clears in seven years. This is not true. In fact, some people who have filed bankruptcy hold some of the highest credit scores even before the end of their seven year period. Their secret, they paid their bills on time, month after month, year after year. They built their credit slowly, making larger purchases after they learned that they could first pay off the smaller ones. Many lenders will be more than willing to lend you money after you’ve filed bankruptcy. The important thing to remember is, just because the credit is available to you, it doesn’t mean that you need it.

Choose Your Debts Wisely

You’ve had trouble paying off your debts in the past, so the last thing you want to do is to start accumulating new debts that you’ll have trouble paying. Start small. Get a credit card from a grocery store or gas station that you frequent. Use the card where you’d normally pay in cash. Then, at the end of the month, take the cash you would have used and pay it toward the balance of the card. Once you’ve developed a budget and allocated a portion of your monthly income toward larger purchases, allow yourself that new house or car you’ve been wanting. But first, make sure that you will be able to afford your payments every month for the lifetime of the loan. Here is a list of recommended Credit Repair Lenders online. It's important to use a reputable lender online to make sure your personal information is secure.

Insure Your Debts

Most creditors offer insurance on your debts in the case that you become unable to pay them. If you’ve filed bankruptcy because of an unexpected life change, you may want to ensure that you won’t end up in the same situation again. Include the cost of this insurance in your monthly payment and pay it every month. Then, should you again find yourself unable to pay your bills, you’ll be covered.

For related links and help Understanding Your Credit Report and Credit Score, ABC Loan Guide can be a great resource. They also have lists of lenders that can facilitate Personal Debt Management.


 
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