One of the worst things that can happen to you is when you have no choice but to declare bankruptcy. As expected, life after filing bankruptcy can be quite overwhelming and you must take a lot of time and effort to get your finances in order and back on track.
According to Craig Watts, public affairs manager for Fair Isaac Corp which originated the FICO scores, “It’s the single worst thing you can do to your credit rating, but the good news is that you can recover from a bankruptcy.”
The question now lies on how does one repair his credit after bankruptcy? Without doubt, you need to be strong-willed and determined. You must have a positive attitude even when it means taking a long time to see positive results.
Because you have a clean slate to start over, you must not take this time to apply for multiple loans at the same time. You can start by applying for an unsecured credit card. There are a lot of lending companies who offer new credit to people who recently filed bankruptcy. However, expect that the term of credit given is not as good as before. First of all, you get a higher interest rate. Next, your credit limit is smaller and you are expected to pay annual fees and other miscellaneous fees.
You can take this offer and use it to your advantage. In using your credit card, be sure that you only use 30% of the limit given. This balance should be paid in full before the due date. Paying the balance in full will save you from paying monthly interest rate. By doing this, you can slowly build back your credit. Eventually when you have maintained a good standing with this high interest credit card, you can apply for credit with a lender that can offer you better terms.
Another suggestion would be for you to apply for a secured credit card that reports to the three major credit bureaus. A secured credit card is issued by a bank based on the savings amount you put in as security. However even with this card, you still have to maintain minimal spending and usage of your card.
Repairing credit after bankruptcy is a tough road to take. Every step you make should be carefully considered. Every time you use your card to charge a purchase, you should take into consideration if you can pay it in full when the time comes. It may be a time-consuming process but in the end, it will greatly benefit you.
Credit repair is very important because there are so many benefits that you can enjoy if you have a good credit report to back you up at all times.