Five Easy Tips For Building Credit After Bankruptcy

Depending on the type of bankruptcy you are declaring, a bankruptcy can stay on credit report for up to 10 years. Now, you should start working on rebuilding your credit after bankruptcy. Here is how to build credit after bankruptcy.  

Check Your Credit Report For Errors

The information in credit reports is not always correct. According to a Federal Trade Commission Study, in the year of 2012, 25% of the customers spotted and disputed errors. These errors affect your credit score. So, check your credit report regularly to identify and dispute errors. Once your bankruptcy is completed, check your credit report. 

• Make sure that accounts covered in the bankruptcy are reported as “discharged”. 

• These accounts should reflect $0 balance. 

• Make sure that the date of filing bankruptcy is correct. 

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So, review your credit report and dispute if there is any incorrect information.  

Consider A Secured or Retail Credit Card 

Filing bankruptcy is going to affect your purchasing power. However, it does not mean that you cannot get any type of credit card. You can still purchase certain types of cards. You can apply for the following types of credit cards. 

• Secured Cards 

• Retail Cards   

Secured Cards 

This card requires an upfront deposit. This deposit is a kind of protection in case you cannot make your payments. The lender provides you with a credit limit which is equal to the amount you have deposited.       

Retail Cards

These cards are of great use after bankruptcy. Retail cards have looser credit requirements as compared to other unsecured cards. However, many of these cards have high-interest rates and penalty fees. 

Consider A Secured Loan Or Credit-builder

You can take a credit-builder loan. This loan is a bit different from other types of loans. A credit-builder loan can help you in rebuilding credit after bankruptcy. You can also go for secured loans. These loans are backed by collateral such as a vehicle or a savings account. If you fall short in repaying your loan, the lender can claim on the collateral. If you feel that a retail or secured card is not right for you, you can go for one of these two options. However, make sure that you can pay monthly payments and other fees on time. The interest rate of these loans is also likely to be high.

Get Your Payments Reported To Bureaus

You are paying your rent on time. You can ask your landlord or property manager to report this information to the credit bureaus. Reporting these payments to Equifax, Experian and TransUnion can make some improvement in your credit. However, keep in mind that not all credit scoring models consider this information. VantageScore and FICO 9 consider available rental-payment information to calculate your credit score. FICO Score XD even considers cellphone and utility payments reported to the credit bureaus. However, you do not know which credit model a lender will consider. So, before you apply, ask about the model the lender is using. 

Become An Authorized User 

The positive credit history of your friend, relative or family member can improve your credit score. You can ask him to add you to his credit card account. This will not hurt his credit score but can improve your credit.