There Is Life (And Credit) After Bankruptcy: 5 Steps To A Fresh Start
Post-bankruptcy, life’s misfortunes may not be fully resolved. Still a future focus is key. Here are five steps to a fresh financial start after bankruptcy:
- Avoid making any big financial or life changes for three months, if other life issues don’t force doing so. It’s especially important not to incur new loan liabilities that may lead to another creditor quagmire. Also, try not to change addresses as that can affect your apparent creditworthiness.
- Get a full credit report to have a complete loan history in hand while rebuilding your credit. AnnualCreditReport.com is a free service of the big three credit bureaus – Equifax, Experian and TransUnion – offering consumers credit reports once a year. (Delinquent loans stay on credit reports for seven years from the late payment date, while a bankruptcy stays 10 years.)
- Correct any credit history errors you find. This may seem pointless after bankruptcy, but if a credit bureau can’t verify disputed information fin 30 days, it has to remove the item from your history. Also, you’ll know your credit history, so you can explain anything major to potential employers, landlords or new creditors.
- Get a new credit card (in some cases). To book a hotel room, rent a car or make online purchases, you need a credit card – but just one. That’s why some bankruptcy filers keep a credit card with little or no balance out of their bankruptcy filing. Post-bankruptcy, you can get a bank credit card by securing its credit limit by depositing the same amount in a savings account. And because a Chapter 7 bankruptcy can only be filed every six years, some credit card companies will take a chance issuing unsecured credit cards but with very high interest rates.
- Pay your bills on time. This obvious step is the most important. This includes all bills: Your mortgage or rent, utilities, car payment and any new credit lines. After a year of consistent, timely payments, your credit score will climb out of the depths. After four years of paying bills on time, your credit rating may qualify for a mortgage.
Rebuilding Credit Takes Time After Bankruptcy
It takes time for bankruptcy situations to develop and time to emerge from them. If “buy now, pay later” got you into bankruptcy, get counseling if you can’t change that thinking yourself. If unfortunate circumstances were the cause, do your best to resolve them with minimal spending.
Tags: after bankruptcy, bankruptcy, credit history errors, financial start after bankruptcy
Posted in What Does Bankruptcy Mean To You