Bankruptcy and Your Credit

After a bankruptcy, it is extremely important that you work to re-establish your credit. The faster that you work to repair your credit the quicker you will regain your life and the ability to live again.

How do I start? That's one of the first questions that customers ask. The first step is to make sure that your credit is reporting correctly. Many creditors do not update their reporting of your credit after you have filed bankruptcy. If the debt was included in your bankruptcy, then you need to make sure that information is reported accurately on your report. Many creditors continue to report late payments and collections as unpaid, years after the bankruptcy occurred.

How do I re-establish my credit if no one will lend me money? Start with a secured loan (installment) from your bank or credit union. Most institutions will make a loan to you, if it is secured by an account that they are holding. Put $500 or $1,000 into a savings account and ask for a loan against that money. Once you have the loan, make sure that your payments are on time and that the loan is paid back in full. Many accounts need time to report. Don't just repay the loan immediately; consider keeping it open for six months to a year.

You also need to re-establish revolving credit accounts to improve your credit. Use the same method of a secured account to receive a credit card. Use and repay the card over the next six months to one year.

Managing your credit is an ongoing process that takes diligence and perseverance. Most lenders require at least a two year period after a bankruptcy is finalized before you can be eligible to purchase a home.

For more information on credit issues go to:

www.experian.com
www.transunion.com
www.equifax.com

This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.