How to Rebuild Credit After a Bankruptcy
Getting credit or reestablishing credit after a bankruptcy requires a proactive approach, wherein you choose to do something to improve your situation and prove that you're capable of managing credit.
Different reasons can bring on a bankruptcy such as a failed business venture, loss of income or another sudden twist in your financial standing. It's easy to think that someone with a bankruptcy doesn't know how to manage their finances. But in truth, many people who file bankruptcy are responsible, they simply fall upon hard times.
Like most things in life, it's possible to reverse bad credit due to a bankruptcy. You probably won't qualify for a home loan after a discharge. But there are ways to acquire credit and begin slowly repairing your credit rating.
- Reaffirm your auto loan: You don't have to include your vehicle loan in a bankruptcy discharge. In fact, keeping your automobile and continuing to make your payments (on time) helps bolster your rating. Speak with your bankruptcy attorney and express your desire to reaffirm your auto loan. If you've already included the vehicle in the discharge, look into subprime auto lending and finance a car with a fresh start lender.
- Don't be afraid of credit: Prepaid or secured credit cards are easy to acquire after a discharge and they're available from local banks or credit unions. Apply for these cards, pay the security deposit and begin reestablishing credit.
- Recognize past mistakes: Don't make the same mistake twice. Be sure to pay your new creditors on time. This is the only way to improve your score. It takes time to reestablish credit, and submitting late or missed payments prolongs the process and makes it harder to acquire better rates on future financing.
