You have received your discharge and your bankruptcy case was a success. Now, your focus should be to rebuild your credit. Many people file for bankruptcy, receive a successful discharge, and neglect to take positive action to rebuild their credit. But neglecting to rebuild your credit after bankruptcy will in essence be throwing away the fresh start you have been granted by the bankruptcy court.
There are many different ways to rebuild credit, but they all revolve around one central fact. A positive repayment history must be established. If you do nothing, your score will not improve. In fact, we have met people who have no credit scores because they have no credit history. No matter your age or circumstance, it is vital for everyone to rebuild their credit after bankruptcy.
These are some of the most common ways people rebuild their credit after bankruptcy.
- Secured Credit Card. Open a secured credit card from a credit card company. However, you should be careful and make sure the terms are reasonable. There are some secured credit cards that have ridiculous fees attached to them. So make sure the secured credit card you apply for is a good one. You can check out Capital One, Bank of America, Union Bank, Citibank, and even small credit unions. Chase has stopped offering secured credit cards. We usually recommend Capital One because they have good terms on their secured credit card. Just make sure that, whoever you choose, the payment history is reported to all three credit bureaus.
- Become an “Authorized User”. If you have a close relationship with someone with great credit and they have a credit card with a good payment history, your credit can be improved by being added as an authorized user on their account. However, be careful since their late and/or missed payments will also show up on your credit history and can possibly harm you as well.
- Self Lending. Self lending through www.self.inc is another option. This is a relatively new way to improve your credit, so make sure you do your research on this company. The great benefit of this program is that no one is denied and you get most of your money back at the end of the term.
- Reaffirmation Agreement. Another option is to execute a reaffirmation agreement on your car loan during your bankruptcy case. This should be discussed in detail with your bankruptcy attorney. In many cases completing a reaffirmation agreement is not in your best interest. As such, you should get all the information from your bankruptcy attorney before you execute your reaffirmation agreement.
These are the most common and easiest ways to rebuild credit after bankruptcy. Even if you decide to rebuild your credit with one or more of these options, please remember that if you are late, have missed payments or end up defaulting, your credit score will suffer and you will actually be hurting your credit.
We have had clients who have had great success in rebuilding their credit after bankruptcy. One client raised their credit score to 670 only 6 months after bankruptcy, another was able to raise his credit score to 690 only 1 year after bankruptcy, and another client managed to raise his credit score to 720 only 2 years after bankruptcy.
Moreover, we also have clients who have purchased a home only 2 years after bankruptcy as well.
How your credit score fares after you file bankruptcy is really up to you. So make sure that you do your best to rebuild your credit score after bankruptcy.