If you have a bankruptcy in your recent past, it's a sure bet your credit scores have taken a bit of a beating. If you wish to refinance or buy a house sometime in the future, it's important to begin reestablishing your credit as soon as you can so your scores recover quickly. The passage of time will "heal" much of the damage, but taking some additional steps can greatly help things along. The sooner your scores recover, the easier you'll be able to get a great home loan down the road.
The following are a few simple things you can do to help rebuild your credit faster after a bankruptcy:
1) Check your credit on a regular basis and fix any issues promptly. Federal law entitles you to a free copy of your report once per year from AnnualCreditReport.com, but it's always a good idea to check it on a more regular basis. If you find an error, contact the credit bureau reporting the error and get it cleared up as soon as possible. Contact information for all three major reporting agencies can be found online or in the report itself.
2) Take care of any open derogatory accounts like collections or charge offs. Even if 100% of your debt was cleared by the bankruptcy, it's not unusual for old accounts to show up as charge offs or collections long after the discharge date. These won't necessarily go away by themselves, so you may need to clear them up yourself. If you do owe on a collection account, you might be able to negotiate a reduced balance with the collection agency. If so, just make sure you get your agreement in writing before sending a check.
3) Make your payments on time without fail. This is an obvious one, but it's important to mention because it's super important. Lenders will want to see that you've reestablished a good payment history since the bankruptcy, and even one late payment could make it tough to qualify for a loan.
4) Keep credit card balances below 30% of the limit. If you have a major ding on your credit like a bankruptcy, it's important to make sure everything else is as good as it can be to counterbalance the damage of the bankruptcy. High balances on your cards can damage your scores because it makes you look "maxed out", which is a significant risk factor for the reporting agencies and lenders. Keep your balances below 30% of the limits at all times, even if you pay your balance in full.
5) Don't close older accounts. The reporting agencies like to see long credit histories, so if you happen to have an old account you don't use a whole lot still open, don't be quick to close it. Closing old accounts can shorten your credit history and damage your scores.
6) Apply for a secured credit card. If you've recently gone through bankruptcy, most lenders probably won't be interested in lending to you for a while. One way you can help reestablish a good payment history is by getting a secured credit card. You simply deposit some cash into the bank and the lender secures the card with the deposit. After you've reestablished a good payment history, you may be able to convert the account to a regular credit card.
I hope that some of these tips are helpful for you! Again, as I've mentioned, time will be the primary "healer" of credit damage after a bankruptcy, but that doesn't mean you can't help things along by taking some of the steps I've listed. The sooner your credit is reestablished, the easier it will be to get a great mortgage deal.
The following are a few simple things you can do to help rebuild your credit faster after a bankruptcy:
1) Check your credit on a regular basis and fix any issues promptly. Federal law entitles you to a free copy of your report once per year from AnnualCreditReport.com, but it's always a good idea to check it on a more regular basis. If you find an error, contact the credit bureau reporting the error and get it cleared up as soon as possible. Contact information for all three major reporting agencies can be found online or in the report itself.
2) Take care of any open derogatory accounts like collections or charge offs. Even if 100% of your debt was cleared by the bankruptcy, it's not unusual for old accounts to show up as charge offs or collections long after the discharge date. These won't necessarily go away by themselves, so you may need to clear them up yourself. If you do owe on a collection account, you might be able to negotiate a reduced balance with the collection agency. If so, just make sure you get your agreement in writing before sending a check.
3) Make your payments on time without fail. This is an obvious one, but it's important to mention because it's super important. Lenders will want to see that you've reestablished a good payment history since the bankruptcy, and even one late payment could make it tough to qualify for a loan.
4) Keep credit card balances below 30% of the limit. If you have a major ding on your credit like a bankruptcy, it's important to make sure everything else is as good as it can be to counterbalance the damage of the bankruptcy. High balances on your cards can damage your scores because it makes you look "maxed out", which is a significant risk factor for the reporting agencies and lenders. Keep your balances below 30% of the limits at all times, even if you pay your balance in full.
5) Don't close older accounts. The reporting agencies like to see long credit histories, so if you happen to have an old account you don't use a whole lot still open, don't be quick to close it. Closing old accounts can shorten your credit history and damage your scores.
6) Apply for a secured credit card. If you've recently gone through bankruptcy, most lenders probably won't be interested in lending to you for a while. One way you can help reestablish a good payment history is by getting a secured credit card. You simply deposit some cash into the bank and the lender secures the card with the deposit. After you've reestablished a good payment history, you may be able to convert the account to a regular credit card.
I hope that some of these tips are helpful for you! Again, as I've mentioned, time will be the primary "healer" of credit damage after a bankruptcy, but that doesn't mean you can't help things along by taking some of the steps I've listed. The sooner your credit is reestablished, the easier it will be to get a great mortgage deal.