How To Build Up Credit after Bankruptcy

Most people think that filing for bankruptcy is like the end of their credit credibility and even their lives but what these people don’t realize is that bankruptcy is a second chance with regards to finance. After filing bankruptcy, you are usually given a clean slate and yes, you can build up your credit to a respectable level once again. In fact, some people say that after bankruptcy is the best time to build up your credit because it is much easier then climbing out of a massive debt hole in order to rebuild your credit. These being said, if you are thinking of filing bankruptcy to rebuild your credit, finances, and your life, then here are some ways on how to do it.

  • Be patient. After filing bankruptcy, you will have to chill for awhile. At this point in time, you will not be able to get a line of credit or a loan without any collateral. During this time, the best thing to do is to lie low, earn as much cash as you can, and relax. At a certain point, your bankruptcy will mature and get discharged. When this happens, you can now start smiling as this is the start of your credit rebuilding processes.
  • Apply for a secured card. Since you just came from bankruptcy, no bank or credit card company will give you a credit card right off the bat. Let’s face it; they really won’t trust you at this point. Nevertheless, you need a credit card as fast as you can. Well, to get one, you can apply for a secured credit card, which is basically a credit card based on cash collateral. . They will give you a card limit based on your cash value security deposit and if you fail to pay your liabilities, they will deduct it from the deposit. Use this secured card to start purchasing. All your transactions will be reported to the credit agencies and will only add to your credit rating and credibility.
  • Do not max it out. Handle your card responsibly and never ever max it out. Use it casually. If the credit agencies see you constantly maxing out your card, then it will seem to them that you are in dire straits finance-wise which means, you are not managing your money well. All these will eventually lower your credit rating and score.
  • Do not shock the financial world. A few months after your successful management of a secured credit card do not mean that your credit rating is now high and acceptable. The whole process takes time. This being said, do not apply for new credit cards or even ask for an extension of current credit without security. Doing this early on will make banks and credit agencies view your situation as a lost cause. They may never trust you again. Wait for about a year before applying for new credit lines however; keep your requests to the minimum. For the meantime, work on your secured credit card to slowly and gradually increase your credit score.

After bankruptcy, you can definitely build up your credit slowly and surely. However, you must learn how to manage your debt and finances well in order to successfully raise your financial credibility.


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