How to Repair Your Credit After Bankruptcy

Every one has there own reasons for filing bankruptcy.  Some people look at bankruptcy as a cure all or a quick fix.  Just file some paperwork and all of your problems disappear.  This is certainly not the case.  Filing bankruptcy is one of the fastest ways to destroy your credit.  Once you file it stays on your record for 10 years.  So before you file, you should consider your options carefully.  Unfortunately, some people don’t have any other option.  It’s either file bankruptcy or lose everything they have. 

The good news is that it is possible to repair your credit after bankruptcy.  It’s not an easy task and will take some patience and self control on your part, but it is possible.  The biggest mistake you can make after bankruptcy is to do nothing.  You have to start doing whatever you can to raise your credit score.  Of course, there’s probably a good chance that you have no idea where to begin.  If so, here are a couple of guidelines to get you started on repairing your credit. 

The first thing you can do to help your credit is to keep any existing accounts open that weren’t included in your bankruptcy.  It’s usually difficult to open new accounts right away, so your existing accounts will be important.  The accounts that you have should be treated like gold.  They should always be paid on time, even if you have to cut out unnecessary expenses to do so.  After some time, these accounts will help you repair your credit.

The next thing you can do to rebuild your credit is to get a secured credit card.  Secured credit cards require you to secure your balance with an upfront payment.  For instance, if you want an available balance of $500, the credit card company will hold $500 of your money to secure payment.  These types of credit cards will raise your credit score but won’t allow you to charge up a balance you can’t afford to pay. 

Once your credit and responsibility are improved, you can apply for an unsecured credit card.  There are some rules you need to follow if you get an unsecured card.  First of all, don’t use it unless you need to.  Second, always keep the balance under half of the total available credit.  Third, pay the balance off in full each month.  If you follow these steps, you’ll have no problem using your credit card to raise your score. 

One of the fastest ways to repair your credit is to apply for loans.  You may have to wait a while for your credit to improve before you can get approved.  Once you are able, apply for a small bank loan.  Don’t use the money you get from the loan.  Put it in savings and use it to make the loan payments.  After you pay back the loan, you can apply for a larger one and so on.  Bank loans are great ways to build your credit back up.

Besides bank loans, you can also apply for auto or home loans.  These are the best loans to repair your credit, but also the riskiest.  You have to be sure you can afford the payments easily before you apply.  As with credit cards, don’t apply for more than you can handle.  You don’t have to have the most expensive home or the newest car.  If you are practical with these loans, they’ll do amazing things for your credit. 

Good credit is all about balance.  You need to have different types of accounts if you want to improve your credit, but don’t go overboard.  If you get more than you can afford to pay, you’ll be right back in the same situation, having to file bankruptcy.  If you are responsible with your credit, it will slowly begin to get better.  Remember, there is hope for your credit after bankruptcy.  You just have to be willing to put in the effort required.