Establishing Credit after Bankruptcy

Rebuilding your credit after bankruptcy can seem like a daunting task at times. Although it will be difficult, there are plenty of ways that you can help speed up the process of rebuilding your credit. Here are a few things to consider about establishing credit after you file for bankruptcy.

Credit Cards

If you had to file for bankruptcy, there is a good chance that high credit card balances got you into trouble in the first place. While they can contribute to debt problems, they can also help you build credit. In order to quickly rebuild your credit after bankruptcy, you should consider getting a credit card at some point.

Credit card companies regularly report activity to the credit bureaus. In order to bump your credit score up again, you will have to use some type of credit. Credit cards are one of the easiest ways to get access to credit, and the credit card companies will report what you do to the credit bureaus.

One of the most powerful ways to rebuild your credit is to get on a regular payment schedule with a credit card. One of the biggest factors in determining your credit score is whether you make your monthly payments on time. If you continually make your credit card payments month after month, your credit will bounce back up again.

In order to get a credit card after bankruptcy, you may need to go after a secured credit card. This will require you to put up some type of collateral in order to gain a line of credit. Another option might be to get a prepaid credit card. With this type of credit card, you will need to provide the credit card company with money before you can use the card.

Home Loans

After a bankruptcy, it may be very difficult for you to get a mortgage. However, there will be some mortgage products out there for you in some cases. You will most likely not be able to shop around much and find a good deal. You might have to take whatever you can get in this situation. For example, you may need to agree to a mortgage with a higher interest rate or an interest-only loan so that you can get a mortgage. While this might not sound very favorable, it will help you rebuild your credit. As long as you can afford to make your monthly payment every month, this can significantly help you in the long run.

Mix of Credit

If you can get a nice mix of credit started, this will help bump up your credit score faster. For example, if you can start debt accounts with a credit card, a store account, a car loan and a home loan, this would be an example of a nice mix of credit. Credit bureaus like to see that you can handle different types of credit at one time. This is a sign that you are able to handle your money properly. As a result of this, they will increase your credit score over time.