To rebuild credit after bankruptcy, it may be easier than you think.
Most of my clients have some sort of new credit within a year or so after their case is over.
Here are 5 tips to rebuild credit:
1. Get a “secured” credit card. This is where you put money in an account and the credit card company – or bank or credit union – will give you a credit limit of that same amount. When the bill comes in, you pay it in full (I suggest this, because the fees will probably be fairly high for a while, so try to not carry a balance). However, only use about 30% of the available credit on each credit card – this will really help to rebuild your credit score!
2. Get an “unsecured” credit card. If you can’t get one right off the bat, start with the secured credit card. Then, ask that credit card company if it will turn it into an unsecured card 6 to 12 months later.
3. Open a checking account, even a small savings account, if you don’t already have one. This shows you are a member of the regular financial community.
4. Get a co-signor for a loan or credit card, or ask someone to add you as an authorized user on their credit card. Being an authorized used on someone else’s card can help, but be sure that the credit card company reports to the credit bureaus as a good reference on your credit bureau report. Becoming a co-signor on someone else credit will certainly help.
5. For a car loan, don’t be afraid to ask. Many car lots are very anxious to sell cars. You are a safe risk to them because you already filed bankruptcy; it’s not like you are about to again soon. Note that it will probably need to be a used car, and that the rates may be high at first. But if the rates are high at first, this car should not be your long-term car, otherwise you’re stuck with a high interest rate car loan for a long time. If you view it as your temporary, stepping-stone, car you’ll come out ahead. That’s because you could probably trade it in within a year or so for a better car with a lower interest rate.
BONUS: There is a little known 6th way to build credit if you rent: your landlord! Some people think only the large apartment complexes report to credit reporting agencies, but even an individual landlord can report you as a good credit reference (without having to pay fees for “joining” a credit reporting agency’s reporter’s group. Experian has help on building credit history, and for a small fee (maybe $10 or so, which you could offer to pay to your landlord), an individual can report you as a good reference. To see how, try checking Experian’s Building Credit section of it’s website.
These steps will really help you jump start rebuilding credit after bankruptcy. Some additional tips are to pay any new credit on time each month. Also, set up a budget. This is always a good idea, but it’s hard to do, especially if it seems the numbers just don’t add up. Do it anyway. Remember to include the unknown, but expected every-so-often expenses, such as a car or house or unexpected medical bills. The best way to handle this, if possible, is to set aside a small amount of your income in an emergency savings account. When something comes up and you need the money, don’t stop contributing to that account each month. You need to be ready for the next expense.
Be sure to visit my website for more articles and information, or to contact me for yourself or someone you might want to refer to me.
Thank you, and I wish you the best,
Peter Blinn
For over 30 years, listening to clients and putting them at ease, while meeting their needs and helping achieve future goals, in Marion (Ocala, Belleview, Dunnellon…); Lake (Leesburg, Tavares, Mt. Dora, Lady Lake, Clermont, Fruitland Park…); Citrus (Crystal River, Inverness, Homosassa, Hernando…); Sumter( Bushnell, Wildwood, Webster, Lake Panasoffkee…; Orlando, and The Villages.
