How to Rebuild Credit and Get a Credit Card After Bankruptcy
A whopping 35 percent of your FICO score is based on how responsible you are when it comes to paying your bills! Unlike collection accounts, bankruptcy resides on credit reports 7 to 10 years depending on which Chapter you filed. All is not lost should filing for this extreme financial relief be unavoidable. Start rebuilding credit after bankruptcy right away to get back on your financial feet, and keep moving forward. A credit card after bankruptcy helps you to rebuild credit fast and reestablish your financial health.
Begin building financial independence immediately by putting a budget in order and reviewing credit reports. Follow through with the actual credit building. With diligence, patience, and perseverance, you may be able to get credit cards after bankruptcy and even buy a home. Here are steps you can take to get back on your feet and maintain your new good credit.
Appraise Where You Stand With Getting a Credit Card After Bankruptcy
Taking a break from credit will be tempting but counter-productive over time. First, dive into your credit score and credit report to check for errors and out-of-date information that needs updating. Next, write a budget dictating the steps for your financial journey. Finally, follow through with credit bureaus to update your credit reports and consider a credit card after bankruptcy.
Set a budget to help build credit after bankruptcy
Cure poor saving and spending habits. Establish sound money management skills. Think of a budget as a roadmap to financial freedom. Keep it simple:
– Break down expenses;
– Distribute income accordingly;
– Set goals.
Write on paper all fixed expenses like utility bills, loans, insurance, day care and transportation. Include saving and charitable donations if that is a priority for you. List every little one, making sure to account for all when you allocate your income. Do this to avoid surprises that become setbacks because you did not allow for them.
Write down all due dates, and minimum payment amounts to allocate from your income. Distribute the rest between expenses you can flex like food, clothing, and entertainment instead of a credit card after bankruptcy. Build into your budget an amount however small for fun recreation, so you feel like you have breathing room.
Curb spending.
Do not spend more than you have. You can look for ways to increase income, but definitely, pare down costs for now. If building a budget seems tedious, remember it is only so at the beginning. It will pay off exponentially in no time with only minimal maintenance to build credit after bankruptcy.
Review credit reports from the big three credit reporting bureaus. Equifax, Experian, & TransUnion
Make sure information on credit reports is accurate. Send written disputes to the respective credit reporting agency to have them corrected or removed, and review regularly hereafter. Get free copies annually from Equifax, Experian, and TransUnion. Scrutinize for errors like:
-duplicate entries
-debts and outstanding judgments included in bankruptcy but still showing delinquent
-accounts that are not yours
-incorrect balances
-incorrect account status such as open or closed on a credit card after bankruptcy
-debts considered too old to be listed on a credit report
Caution avoid credit repair agencies when rebuilding credit
As tempting as they may sound in advertisements, avoid credit repair companies. Consumers pay them large fees for assistance that is available free from credit counseling services. None repair credit overnight. Be confident without slacking: Roll up your money-management sleeves because you got this. Instead of risking worse financial condition than when you start, funnel into your savings account or onto a credit card after bankruptcy amounts you would have paid in fees.
Put your credit card after bankruptcy plan into action.
Making all payments on time is critical. Set up a system for making sure everything gets paid on time each month. Cure lazy payment habits. Organize a payment schedule. Do not incur new late or missed bill payments. Limit opening new credit cards after bankruptcy to one or two. Eliminate balances each month especially on those credit cards after bankruptcy.
Start applying for credit cards after bankruptcy
Not all lenders report credit history. Ask before signing any agreements for loans or a credit card after bankruptcy. Look at credit unions and small banks for surprisingly warm welcomes and options for loan products as you rebuild credit. The First PREMIER® Bank Credit Card issues credit cards to individuals who have recently gone through bankruptcy. Later when you build fair credit you can try a card like the Credit One® Credit Card.
Hands-off savings account
Savings matter to reach goals faster as you build funds for emergencies and large purchases like a home. However, the habit of saving counts more than the amounts. Make regular deposits. How faithfully you invest in your commitment will matter in saving for emergencies.
Secured credit cards after bankruptcy
Opening a secured credit card after bankruptcy or credit builder loan may help rebuild credit after bankruptcy. Available through most banks, secured credit cards work like regular credit cards, except you must pre-fund them usually $200-$400. Watch for fees, and shop for best terms. Charge one small expense on each credit card, each month, to pay off by the due date to improve credit score. Be direct. Ask if they report credit history before signing any agreement for a credit card after bankruptcy.
Reviews of the Best Secured Card Offers With Applications
| Capital One ® Secured MasterCard ® | Discover it® Secured Credit Card |
| Citi® Secured Mastercard® | OpenSky® Secured Visa® Credit Card |
Rebuild credit after bankruptcy with a credit builder loan
A credit builder loan is a unique type of loan that requires a security deposit up front. Ask lenders if they offer an option to put the amount you borrow into a savings account. It stays there while you are paying it off. Then, then they release it to you at the end of the loan. In exchange, they report your credit history to the credit bureaus.
Personal loan after bankruptcy
Borrow a small amount from your bank or credit union. Repay on time and pay off within a few months. These typically offer better interest rates than with a secured credit card. Rather than spend it, use the funds to repay the loan on time each month.
Co-signed loan or credit card after bankruptcy
These help only a little, and not all banks allow this. You benefit from the good credit history of the primary account holder. While it can be helpful, cosigning can be a bad idea. Be diligent making payments on time, so their credit doesn’t get ruined.
Continually monitor credit scores after bankruptcy
Once you have reviewed your credit reports, stagger checking them quarterly to avoid an overwhelming stack of reports to proof later. But review them you must like clockwork, and stay on top of errors throughout as you build credit after bankruptcy.
Be conscientious and prudent about what you are doing with your money.
Not all bankruptcies are due to mismanagement of funds. Some result from catastrophic expenses like medical bills, divorce planning and other reasons out of your control. Strive only to correct mistakes or poor money management habits that led to your bankruptcy.
Seven to ten years from now may seem a long way off. Adopting a pro-active role to rebuild credit after bankruptcy will yield positive results sooner than you may think. Get your footing setting up your new money management plan immediately after your debt is discharged. Stay in step with a small investment of time each month and then quarterly. Follow through with the focus on cleaning up, rebuilding and monitoring your credit with a systematic plan. Only look forward, leaving behind that rainy financial season as you and your credit spring into full bloom once again.
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