Bankruptcy is a
complex and long drawn out legal process. It sometimes can have a stern effect
on your credit, but the effect doesn’t last forever. Bankruptcy although stays
on your credit report for 10 years, however its effect reduces as time passes
by. Meanwhile, you could begin to improve your credit immediately by
considering a few proactive steps.
Practice wise credit habits
Practicing wise
personal finance management is the key to creating a brilliant credit after
bankruptcy. When you abide by the principles, your credit recovers sooner –
Make timely
payments – Payment history happens to be the biggest factor in deciding on your
credit scores. When you make your loan and credit card payments on time, you
receive positive information on your report. This eventually helps you reform
your scores and be reliably presentable to your future creditors.
Always stay on top of your bills –
Paying your household bills such as utility accounts and
cellphone on time helps you avoid late payment penalty fee and also prevents
your accounts from going to the creditor’s collections which can again damage
your credit. On-time payments of your utility, cellphone, cable bills and
online video streaming bills can actually help you rebuild your credit scores –
all you need is a planned spending.
Avoid using plastic – Holding a credit card and making timely payments is a brilliant way
to rebuild your credit. However, contrary to the popular myth, you don’t have
to carry a balance to maintain a good credit. In fact, the smartest and
quickest way to rebuild your credit is by paying off your credit card balances
and continues to pay them off every month in full.
Save for unforeseeable situations –
If you can’t find any money in saving when needed the
most, a little however unpredictable expense can throw your finances out of the
track, forcing you to take on new debts, while skipping existing payments. Even
though you fail to put tons of money into emergency savings fund, you can still
begin by marching towards a goal that is achievable for you, such as saving one
month’s rent or those expensive dinners at expensive restaurants.
Give it some time – When it comes to rebuilding your credit scores, quick fixes have
always put people in more troubles rather than solving the existing ones. Credit
repair agencies claim that they can repair your credit scores in no time, but
their ostensible quick fix comes with hefty price tag and might also include irreparable
risks. Eventually, the most effective and affordable way to improve your credit
score is by working on it yourself.
Can I apply for credit card after filing bankruptcy?
Once you have
filed bankruptcy, it might be hard for you to get approval for new loans or
credit card, however if you have open credit accounts, that will help you
rebuild your credit scores.
Secured credit
cards are the safest way to get started. You need not good credit in order to
qualify for secured credit card. Rather, you qualify through making deposits
that the lender can keep in case you have to stop making payments on that
account.
Below are some
of the key features to consider in a secured credit card –
Report to credit bureaus –
Be sure that the card issuer is going to report your account details to all
three major credit card bureaus, including Equifax, TransUnion and Experian,
allowing you even better opportunity to rebuild your credit scores.
Option for conversion – Your
secured credit card will ideally convert to unsecured one after a certain
amount of time. As soon as it converts, you receive your deposit back, if you
have had paid your balance already. You can now keep using the card to help
rebuild your credit scores.
Deposit amount – The
bigger the deposit on your secured card, the higher the limit. When you have
more credit available to yourself – which you are not using – it helps you
improve your utilization ratio and also rebuild the score.
Rates and fees – Interest
rates and fees might be high compared with those of unsecured cards. Be sure
you have reviewed the APR, maintenance fee, annual fee and any other
associating fees to select the most suitable secured card and keep the costs to
minimum.
So, if you have been wondering whether or not
can you rebuild your credit scores after filing for bankruptcy, the answer
is – YES, YOU CAN.