Post Bankruptcy Rebuilding your Credit

You knew it when you were going into it, but it was seemingly unavoidable: filing for bankruptcy. Now you have to deal with the effects of that decision: specifically, how to rebuild your credit. Hopefully not with the idea of getting back into massive unsecured (credit card) debt, but to be able to get good rates on vehicle loans and mortgages when they are needed.

Here are some steps that will help you rebuild your damaged credit

Use what you have. If you affirmed some loans during your bankruptcy, then you are still paying on those loans. They will help get your credit headed in the right direction as long as you are not late in making the payments, etc. You can also use utilities and rent or existing mortgage payments to help re-build as well.

Wait for three years. If you are thinking about financing for a car, you had better wait at least three years. The reason is that even though the bankruptcy stays on your credit history for ten years, most financial institutions will consider a loan for you after just three years of serving your ‘term.’ The reason is because they realize that even though you have a bankruptcy, you can emerge as a responsible credit user before the ten years is up. Plus, they really need the business. The most you will probably have to do is to provide a copy of your bankruptcy settlement.

Look for small loans. Some smaller loans can help your rebuild your credit. Even if these are through the loan companies such as American General or Beneficial. True, you will pay a higher interest rate, but at least it will get you started in the right direction. These companies report to the credit bureaus so this makes a lot of sense. Stay away from the payday loan companies. They charge too much in interest and do not report to the credit bureaus.

Check out a credit union. You will find that one of your best options and allies will be your local credit union. These financial institutions are looking for long term relationships with customers like you, so go check them out. If you are able, get a small unsecured loan, or a credit card through them. Their rates are normally better than the bigger guys, too.

Using these tips you should be able to build up your credit score and history with some positive financial moves that will be very beneficial down the road. But then again, you might want to consider not worrying about your credit at all. Many people get into bankruptcy because they make too good use of their credit to begin with and find themselves over leveraged. Maybe instead consider a cash only lifestyle for the time being.