Will Credit be Available after Bankruptcy?… Cheer up! Bankruptcy is not the end of the world! For those who have this mistaken notion, this article will straighten out all the fallacies and present facts about credit rating and credit record after bankruptcy declaration. As opposed to what other people believe that there will be no more credit transactions after bankruptcy declaration, bankruptcy credit is still available for you and you’ll have your chance of proving that you have the resolve to rebuild your credit.
For starters, a secured credit card will do. What does secured credit card means? Basically it’s opening a savings account in your bank, and the credit limit of your card is the savings account balance. Should you not be able to pay on time, the delinquent payments will be deducted from your savings account deposit. This credit card works just like any ordinary credit card, it’s just that the card uses your savings account as security. If you don’t want to get a secured credit card, you can opt to go for the store card. Another way to build your credit is to get a credit card for people with bad credit; however, the disadvantage of this card is that it is expensive with high interest rates and has a lot of fees during application.
Applying for a small loan will also help in rebuilding your credit score. Try to apply for a car loan or a personal loan so there will be various credit transactions in your report. After your bankruptcy declaration, you can keep your home and car by signing a reaffirmation agreement. This agreement will enable a debtor to continue paying for his car or home mortgage and this will create a positive feedback on his credit rating.
Contrary to the belief that applying for a lot of credit accounts will boost your credit rating, it has the opposite effect. This situation will create hesitation on the part of the creditors when they see a lot of inquiries on your credit report. Furthermore, it is important to keep the balances of your credit card at a minimum so that your credit score won’t decrease.
If you have already applied for all the cards mentioned above and you have established your credit record, you can now apply for a regular or unsecured credit card. If you are still denied, give it a break, take a 6-month hiatus from credit card applications, and you can try again.
Lastly, it is important to know the value of money. During credit counseling in your bankruptcy application, you have been taught how to handle your money and develop a budget. Put these to good use. Create a budget that will outline your bills and expenses and make sure to set aside a small amount as an emergency fund. Don’t rely on credit cards too much because there might be tight situations in the future. Best of all, pay your bills on time from your rent, cable, phone, and utilities. A good payment history can also be used to establish your credit score.
As always, bankruptcy is not the end of the line, it is the start of a challenge. Establish a good credit score and credit will be available after bankruptcy.