Building credit after bankruptcy will actually do a lot more for you, and is a lot easier, than you think. It is a commonly held belief that once you file all that paperwork, while your debt will be behind you, people will judge your finances for the next ten years and make doing much of anything impossible.
This does not have to be the case.
There are many instances where people have worked hard and stayed on top of things and within two years had a decent score again (or for the first time). After two years lenders will again start accepting your application for a home loan, and if this, or any other endeavors are in your future plans you'll want to be prepared.
People will check your score when you go to apply for a rental application for a car or apartment, when you go to apply for any kind of loan, when you apply for insurance, and often these days when you go to apply for employment.
For all of these reasons immediately starting to build credit after bankruptcy is very important.
There are two types of payments involved in your financial history that are used to calculate your score, revolving (credit cards) and installment (loan) payments.
You'll want to start by building up revolving payment history with a card, you can get a secured credit card through your bank. Make sure that they report to the three major bureaus, and that after 12 to 18 months you will be eligible to apply for an unsecured card as long as you make your payments on time.
After six months to a year of this you'll want to apply for some kind of small loan. It doesn't matter what this is for really, all that matters for our purposes is that the lender reports to the three major credit bureaus and that you will be able to handle the payments and make them on time each month.
Make sure that you pay this down quickly, and that you keep your card balances below thirty percent of their limits and pay them off at the end of every month and you'll be on your way to building credit after bankruptcy.
This does not have to be the case.
There are many instances where people have worked hard and stayed on top of things and within two years had a decent score again (or for the first time). After two years lenders will again start accepting your application for a home loan, and if this, or any other endeavors are in your future plans you'll want to be prepared.
People will check your score when you go to apply for a rental application for a car or apartment, when you go to apply for any kind of loan, when you apply for insurance, and often these days when you go to apply for employment.
For all of these reasons immediately starting to build credit after bankruptcy is very important.
There are two types of payments involved in your financial history that are used to calculate your score, revolving (credit cards) and installment (loan) payments.
You'll want to start by building up revolving payment history with a card, you can get a secured credit card through your bank. Make sure that they report to the three major bureaus, and that after 12 to 18 months you will be eligible to apply for an unsecured card as long as you make your payments on time.
After six months to a year of this you'll want to apply for some kind of small loan. It doesn't matter what this is for really, all that matters for our purposes is that the lender reports to the three major credit bureaus and that you will be able to handle the payments and make them on time each month.
Make sure that you pay this down quickly, and that you keep your card balances below thirty percent of their limits and pay them off at the end of every month and you'll be on your way to building credit after bankruptcy.