Rebuild Your Credit After Filing Bankruptcy
The moment the debtor files for bankruptcy, he or she should start considering ways of rebuilding their credits lost in the whole procedure. Though bankruptcy will stay for around ten years on your credit record does that does not mean that you cannot indulge in any financial plans such as buying a car or student’s loan. In fact foreclosure actually brings about changes that are for the good. However there would be hardship as one has to keep check on their extravagance for sometimes in near future in order to build a strong financial base and recover from the crisis that has aroused from the Bankruptcy. There are several ways to rebuild credits by one aims to choose that mode through which rebuilding credits would be quickest as well as secure and steady.
What is Credit Score and how it works?
One can keep record of his or her credit score in order to undergo a self-analysis of their present financial state. FICO score or Fair Isaac Corporation is the most commonly used credit score recorder that scores your credit in a scale ranging from 300(worst) to 850(the best). There is a belief among many that there is no way to improve your credit score after bankruptcy till 10 years while in reality the records after bankruptcy equally matter hence one should be careful not to repeat all that initially led to the bankruptcy and the score will eventually increase.
How can one rebuild Credits after Bankruptcy?
Availing a secure credit card can help in boosting your credit score. It is possible for a person to apply for a credit card soon after foreclosure of the bankruptcy filing. However one should be careful to avoid applying for credit cards that includes an annual fee or application fee. But most important of all, one must make sure that they can clear their monthly dues in time.
Refrain from using your entire credit limit as it affects your credit score.
Obtaining a car loan or any other installment loan is another way in which you can rebuild your credit limit.While installment loans are harder to get after filing bankruptcy but not altogether impossible. Making timely payment on installment plans help you rebuild your credit score as well.
One should however limit the use of credit cards after going through bankruptcy and should not apply for too many credit cards.
Try and don’t miss payments as this can become a major setback in your credit records.
However you cannot obtain a home for a while after Bankruptcy. It is recommendable to wait for at least 5 years before taking up the decision of getting a mortgage because it will take quite a long time to rebuild enough credit score to make sure that your mortgage terms are within your limits.
One should rebuild their credit slowly but steadily. Last but not the least, do not forget of your bankruptcy history even if it is no longer recorded on your credit report but in case you are asked of it while applying for new credit cards you have to answer “yes” as saying otherwise is illegal and considered fraud.