Regain credit after bankruptcy
Edited by Ephraim, Charmed, Innocent Yogo, Eng and 3 others
This article will be on how someone can regain their credit after declaring bankruptcy. A lot of people file for bankruptcy in order to clear up old debt fall victim to not being able to build back their credit for lack of knowledge. This article will enlighten all to how to regain their credit back after they file for bankruptcy, and in some cases, to get their lives back. Filing for bankruptcy may clear all of your debt but it does take you back to the first step in your credit history and even further back to when you had no credit. Bankruptcy should be your last resort to fixing your credit and debt problems for it is a long journey to regaining stability in credit after you are done with the process.
- 1Open up new accounts after declaring bankruptcy so that you can begin to rebuild your credit and also your accounts for filing bankruptcy would cause you to have to rid yourself of all of your accounts.More than likely you will need to open up an account with a bank credit union versus a regular banking establishment so look for a credit union in particular. Also when choosing a bank use the bank that will accommodate you the most instead of choosing a bank with a ton of services that you will not be utilizing. Choose a bank that is close to your home or at least to ten miles away to ensure easy access to the bank. The bank that you are choosing should also be a bank that is located in other places instead of your home town or city. Consult your family and friends also to ask them about their happiness with the interest rates that they are currently paying with their banking institution. Pick wisely and according to the tips above to ensure you get the best banking opportunity.Advertisement
- 2Sign yourself up for a credit card so that you can use it to help regain your credit.Do this only if you have enough money stored in order to pay the fees for we all know how credit card works. You only get the credit when you pay back on what you have used. Preferably get a secured credit card with a low limit so it will be easier to manage and less tempting. A secured credit card is like a debit card where you pay them the money first before you use the card so it secures you from using too much money and digging yourself back into a hole. The good thing about a secured credit card is that it reports everything you use and pay back to all the major credit bureaus to help you regain your credit the safest way possible. As you improve your credit continue to raise the credit limit higher to greater the percentage at which your credit will increase as you pay back what you owe on the credit card. If you do not know for sure if your credit card reports to the three credit bureaus feel free to ask your bank if they do so that you can have a heads up on if you are on the right track. Do not get discouraged if you file for a credit card and get denied for some bank will not allow you to get a credit card until up to a year after you have filed for your bankruptcy so if needed wait for that period of time before re applying to get the credit card you desire. Another good tip in getting a credit card is for you to get a credit card through the bank of which you are already banking with and also have the debit card and savings account.Advertisement
- 3Apply for a credit card with either a retail store (best buy, Walmart or gas station) these cards will work just as a credit card would but for purchases through the store.Just as the credit card ensure that all your transactions will be reported to the main credit bureaus to help you out with regaining your credit, if they do not report to them then the credit card is not useless but will take a longer time for you to regain your credit score for it will not report to the bureaus that they need to report to help. The best stores to go to will be stores where you are not necessarily interested in as you will not be tempted to blow it all in the store. If you get a card at a store where you regularly shop at then you will put yourself at risk of using all the money that was given to you on credit therefore hurting your chances of being able to pay it all back in a timely fashion. Avoid the pricey fees that most cards ask for in order to even get the card in the first place as the start-up fees already set you back before you even gain use of the card so in a way you are paying a payment ahead of time that you will never gain back through using the card, so stay away from the high start-up fee prices.
- 4Ensure that every month you pay off all your balances to the people you owe through all the credit cards and even negative balances in your bank accounts.A myth about having a balance carrying over is good for you is not true if you already have bad credit. Remember that you are gaining your credit that was lost back and your credit is not perfect at the moment. The good thing about paying every month is that the credit bureaus will see that you are in fact being responsible with your money and it will show greatly on your credit score. It will be hard to balance out everything that you have used but it is important to balance out everything beforehand so that you do not get too far behind in your payments. When starting this journey ensure that you only buy what you need to survive and take care of all your needs during this process and you will be fine but ensure that every month you have a good balance with every bank debit card, credit card and account that you have for it will determine the rate at which your credit rebuilds itself back up.
- 5Request reports from your credit bureaus to check and see how your credit is either rising or declining.You can get a free report only once a year without having to pay a fee or have your credit score go down for checking on your credit. Check your score in order to keep track of your progress to see if you are on the right path or the wrong path in order to make some adjustments. If you check your credit score more than once a year your score will go down for the use of you checking it more than once so be careful when checking your score multiple times during a year. You can contact each of your credit bureaus individually in order to get your individual scores, the three main bureaus are Transunion, Experian and Equifax their number are online for you to request your report from them individually so take advantage of the free check per year. The recommended time to check your credit score for the year will be after tax time for when you receive your tax money you may pay a little of your bills to your accounts which will give you a credit boost which will appear on your credit scores.
- 6Pay all of your bills in a timely fashion regardless of what kind of bill it is that you are paying.The journey to regaining credit does not mean that you will be late in paying your bills on time for this will not help your credit score at all. If you have to pay your bills late then it is time for you to stop the rebuilding of your credit for you will not benefit from paying your accounts off in time but not your regular bills. When paying your bills ensure that you send off or pay your bills at least one or two days in advance of the due date. When paying your bills on time you will also get accustomed to the responsibility of paying your bills on time and this in turn will help you with all of your others bills. This venture is not an easy one but if you want to regain your credit, it is important to pay all your bills off and not just the selected few in order to regain your credit worthiness. If paying every bill gets too hard for you then you will need to put a pause on rebuilding your credit until you are financially stable to take on that responsibility.
- 7Request to upgrade to a non-secure credit card when the time is right for this to happen.If you feel as if you are ready to take on the responsibility of having an unsecured bank card then go for it and sign up for one but understand that this is the big leagues of credit cards and it can either help you out a lot or hurt you drastically if you do not pay the balances off on time. Only attempt this if you have held your secured card for longer than a year without having any type of setbacks. Apply for the credit card through the same bank you already have instead of going to another institution. It's always a good idea to have all your cards and accounts with the same bank to help you better keep all your transactions in order with one report monthly.
- 8Get by without having to use any type of financial institution other than a bank.If you are planning to get a vehicle or anything that requires you to have to sign up for a loan then do not do it for these institutions will not be lenient towards you in any way. Unlike banks loan companies tend to make a lot of profit from you without giving you a secure boost in your credit score. Financing something will help gain you credit but very low impacts from them in regaining your credit score so stay away from them as much as possible when trying to regain your credit.
- 9Set up a stash so that you will be able to use it in case of an emergency, a lot of ways that the regaining credit venture ceases is when the unexpected emergency happens that you are not prepared for at the time.By putting away a stash of money whenever an emergency arises you will not have to revert back to your credit cards or even overdraw your accounts in order to help with your situation. The more money you have in your stash the bigger cushion you will have just in case something comes up. Make sure that your cushion of money is not touched for any reason other than an emergency, even though this is a very hard thing to do it will help your overall process.Advertisement
- If you have problems with any of these steps, ask a question for more help, or post in the comments section below.
Categories : Financial
Recent edits by: Rebecca M., sheryl hernandez, Eng