A Bit About Building Credit After Filing Bankruptcy
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A Bit About Building Credit After Filing Bankruptcy


Updated: February 22, 2013

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If you are forced with needing to rebuild your credit after a bankruptcy, the thing that will help the process the most is time. Every single state has different regulations pertaining to how long a bankruptcy entry will remain upon your credit report, typically anywhere between ten and fifteen years. Beyond that lenders carrying out legal searches may be able to dig up evidence of your bankruptcy but it will no longer surface as a negative entry on your credit report. And while time may be the very best remedy, there are specific actions you can take in order to help the process along. Keep a Close Eye On Your Report The best thing you can do post-bankruptcy is actively monitor your credit score. This is a crucial step towards you rebuilding good credit. After you declare, the judge will work with you to settle or close all of your existing debts. All of your creditors, one by one, will be asked to terminate all communications with you. They will report your defaults to the credit scoring agencies but they will not be able to negatively impact your score any further by making repeated attempts to collect the debt. By being vigilant about your credit report, you see to it that lenders do indeed stop making entries to your credit report. In this way you can make sure that your credit score does not dip needlessly lower in the months following your bankruptcy. Do You Best To Amass Some Assets Immediately following your bankruptcy, you will find it very difficult to secure a loan. You should focus on saving your cash a keeping an eye out for any assets you can gather. If you can manage to save up a few thousand dollars, you might want to consider buying a car in order to build up your capital base. Don’t blow through all your cash buying stuff, but make strategic, key purchases in the interest of replacing the assets that were liquidated during the course of your bankruptcy. Keep in mind that assets with actual cash value such as stocks or vehicles add more to your asset base as opposed to items like antiques which have only hypothetical value. Take Out A New Loan Once you have enough assets equaling a high enough value, you should be able to secure yourself a loan even burdened by bad credit. In most cases, a lender will want to secure your loan with collateral, which you can do with the assets you have gathered. However, do not take unnecessary risks with your hard-earned assets. Instead you should concentrate on taking out a series of small loans that you know you can repay easily. Due to your credit history, the loans you qualify for will likely come with low limits and high interest rates. In different circumstances, this would not be the kind of loan you want but given your recent bankruptcy taking a loan with unfavorable terms can potentially do you good. A good approach is to make sure you have enough money in your savings to cover three months-worth of loan payments just in case you suffer from unforeseen circumstances such as a financial emergency or job loss. Slowly Build Up Your Available Credit As you take out more loans, your opportunity to borrow will continue to increase. It is always in your best interest to make sure that your allotted credit limit is much higher than your amount of debt. In fact, you should keep your debts 30% or below your limit. It also behooves you to have assets worth much more than your credit limit. Keeps all of this in mind and attempt to balance your credit, debt and assets against each other favorably so that your credit score will improve. Be absolutely certain that you make all of your debt payments on time every month. As long as you do so, you will notice your score inch up little by little.

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