How to Re-establish Your Credit from Bankruptcy?

Rebuilding credit from bankruptcy sounds impossible. Yes, the process is difficult and requires patience as its effects often last up to 10 years on a credit report, but it’s doable. It can be achieved by counterbalancing the negative info on your credit report with more positive data.

Begin with the basics

 

Most lenders want to ensure that you have sufficient income to pay off your present obligations, and have some more dollars to spare. A smaller debt increases your chances of qualifying.

 

Here’s how to start:

 

Draft a budget

 

A budget ensures you monitor your finances.  If you didn’t learn how to budget during the

Credit counseling before completing your bankruptcy then you can seek assistance from a credit counseling agency.

 

Start establishing an emergency fund

 

According to Urban Institute, having even an amount as small as $250 in savings for unforeseen expenses can save you from going for payday loans or accumulating debts on credit cards, which can only lead to more debts.

Have a post-bankruptcy credit plan

 

Since lenders are not new to people like you, they’ll definitely ask you to prove that your credit re-establishment strategy is workable. Remember, the only difference between you (a bankrupt trying to rebuild credit) and an individual building credit from scratch is that the creditor already knows a lot about you from your history. But some modern institutions are willing to help you get back on your feet by providing a credit repair merchant account.

 

Assess your situation…

 

Check your annual credit reports as they are collectively used to work out your score. This means all incorrect negative information reduces your chances of clearing your debts. If you find any mistakes, you should file disputes and have them corrected.

 

For accurate negative information, reports will declare you bankrupt for 10 years. Be aware that a Chapter 7 filing only cleans out debts, but doesn’t clean you overall credit reports.

…then check your credit score.

 

After assessing you situation, be sure to check free credit score on websites like NerdWallet. If possible, track your month to month scores.

Go for a product that suits your state

 

Your poor payment history makes you a risky borrower. You can fix this by giving further assurances that you’ll repay the money you receive. Discover four ways to better your financial profile, get credit and help rebuild your score:

 

  • Go for a Secured loan
  • Utilize Secured credit card
  • Try a Co-signed credit card or loan
  • Make use of “Authorized user status”

The Bottom line

 

Reinstating from bankruptcy to a better score requires patience and thorough planning before implementation as one step triggers the success of the other. Ensure you consult with financial experts like FAM to confirm to make sure you are on the right track.

 

Author Bio

Business Funding expert, Nathan Hale, founded First American Merchant with his eyes set on helping the backbone of our country, small business owners. His passions include writing/producing music, and travel. First American Merchant is America’s Best credit repair merchant account company, serving both traditional and high-risk Businesses.

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