Next in our series on bouncing back from bankruptcy, we address the long and winding road of reestablishing your credit. When you filed for bankruptcy, you essentially wiped the slate clean. In fact, it’s so clean it’s practically in the red. The first step to climbing out of the hole of bankruptcy is financial prudence by setting a budget and learning to handle your cash. The second is building trust again with creditors and that takes time.
Secured Credit Cards
The best way to build trust with creditors is to reestablish credit through a secured credit card. Secured credit cards give you a small credit line with a low limit. By making monthly on-time payments, your good behavior is reported to the major credit reporting companies. The downside to secured credit cards is that, in some cases, you actually have to give the issuer the cash equivalent as collateral. For example, you can be issued a secured credit card with a $1000 credit limit but you may have to make a $1000 deposit with the company to hold as collateral while you rebuild your credit. When you close the account, however, the issuing company will give you back the deposit.
Maintain Steady Employment
One of the best things you can do for your credit is to maintain steady income. Potential lenders like to see steady income, this means you’re reliable.
Get loans again
Even though bankruptcy stays on your credit history for up to seven years, typically after about three years lenders will start to let you begin to take on loans again –but at a cost. Often, these loans are subject to subprime rates. These are interest rates that may be higher than rates that are charged to other creditors due to your poor credit history.
Ignore the Scams
There are a lot of organizations out there that promise to “fix” your credit and “restore” your credit after you file for bankruptcy. The only thing that can fix and restore the past is time. There are a lot of scammers that can offer these fixes and restoration for a fee. If you do feel as though you need some guidance, check out these approved credit counseling agencies by the U. S. Department of Justice by clicking here.
Post-bankruptcy restoration is something that can only be healed with time, responsibility, and hard work. All of which are things that are controlled by you.