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- Prepare for Bankruptcy
- Bankruptcy Trustee
- Non Dischargeable Debt
- Bankruptcy Fraud
- Bankruptcy Pitfalls
- Debt Collection Practices Act
- How to Have Top Rated Credit
- Credit Counseling
- Identity Theft and Identity Fraud
- Department Store Credit Cards
- Famous Bankruptcies
You filed personal bankruptcy. Now what do you do? How do you rebuild your life and your credit post-bankruptcy?
The first question you should ask yourself is this - why is good credit important? There are many good reasons. A person with good credit may pay less for insurance, for example. Many states allow insurance companies to base your premium (in part) on how good or bad your credit score. If you have bad credit you will pay more for your vehicle financing (your bank will give you a loan at a higher interest rate), for a home loan and for general credit, such as Visa or Mastercard.
The first advice for anyone who is filing personal bankruptcy or considering it – order your free credit report. You are allowed, by law, to order a free credit report from the three major reporting bureaus once each year. Order your report over the internet at no charge. Get familiar with what is on your credit report. If you spot anything unusual or incorrect contact the credit bureaus and dispute it. Staying on top of your credit needs to be a high priority for you.
Secondly, make all your monthly payments on time. Your credit score can slowly be rebuilt by demonstrating that you can pay your bills when due, not late.
Resist opening a lot of new credit. Anytime you apply for credit anywhere your credit report is run and will reflect this fact. The more often your report is run by someone offering you credit it can ding your overall score. Approach obtaining new credit very strategically. For example, if you are offered a department store card versus delaying a purchase it may be better to delay the buying decision. Department store cards often 1) charge higher interest rates and 2) offer you a very limited use. You can only charge in the one store. Why not have a Visa or Mastercard that can be used anywhere versus using a single purpose credit card.
Do not max out your credit card. Credit scores consider how much of your total "available" credit you have charged. Always try to keep a healthy balance between how much credit you have on a card and how much is charged.
Understand that you may be charged a higher interest the next time you finance a car purchase. Go ahead and make that purchase but be sure the payment is within your means. Then make those payments on time. And this includes mortgage payments too.
Rebuilding credit takes time. Likely, you did not fall into bad credit rapidly and you will not recover from it rapidly either. That's ok. Just live within your means and make sure that you pay your bills on time. Then over time your credit score will improve.