There are several ways to start rebuilding your credit. A hard dose of truth is needed here: Rebuilding your credit is a slow meticulous process and not something you can achieve overnight. The key is to establish consistency of pay-offs which creates a better image of credit responsibility.
First, take a look at your budget and find some savings right away.
- If you can save 5 % of your income, deposit the funds in a separate savings account. To ensure success, try having your savings deducted from you pay and deposited directly into a separate savings account;
- Once you have built the savings account you can use it as collateral for a loan. Go to your bank and get a small loan using the savings account as collateral. Pay it back on time every time;
- After successfully completing the steps above, you should carefully consider applying for a couple of credit cards, but not more than three, with a low limit and secure the limit by using your savings account as collateral;
- Alternatively, you can get a secured card where you deposit cash and charge against it. Search for Secured Credit Cards BUT watch out for outrageous fees. Expect some Credit Cards to have an annual fee. Pay advances back over two months so that they will be reflected as positive marks on your credit report;
- Apply for store and gas credit cards that you would normally pay cash;
- You have utility bills and rent so pay them on time from now on;
- Check your credit reports every 4 to 6 months for errors as well as omissions;
- Try to minimize the number of inquiries on your credit report, once you have established few good credit lines.
There is light at the end of the tunnel. In fact, two to three years after a bankruptcy discharge, individuals are eligible for mortgage loans on terms comparable to similarly situated non-bankruptcy individuals. This means that your income and down payments play a bigger role after two years while your bankruptcy has a diminishing effect.
Rebuilding credit after bankruptcy is achievable with patience and careful attention to detail. Avoid credit repair offers. Instead, you want to implement the steps discussed above.
Joe Githuku. 410-849-9529.
This article is provided for informational purposes only and should not be construed in any way as legal advice. This article does not create an attorney-client relationship.