- Personal Finance
How to Rebuild Your Credit After Bankruptcy
Even Before the shock of Bankruptcy wears off, you likely have been wondering how to rebuild your credit after bankruptcy. In After Bankruptcy - Rebuilding Your Life, a general program was identified for dealing with life after bankruptcy. In the current article you will find some useful tips and links that will help you rebuild your credit quickly.
Personal Bankruptcy, especially chapter 7 which liquidates nearly all of your debt, gives you a clean start. The black mark is on your credit for 10 years, but you can get an adequate credit score in a few years, with a plan. Of course you will need to budget better, but a big part of the process involves knowing how, despite bad credit, to responsibly obtain and maintain a bank account, credit cards, a computer, and even a home.
Cut Up Your Credit Cards
If you were candid about your debts in the bankruptcy, you may not have any credit cards left. If you have several, cut all of them up but one. From now on you will not use that card for any purpose but to rebuild your credit. If you charge something, it should be something you absolutely need. You pay it off in that billing cycle.
If you do not have any credit cards, you need to get one, and initially it will surely be one of the ones where you pay very high rates. Minimize monthly fees. You may have to get a secured card, in which you give them money, say $200 which is collateral, and they give you the $200 line of credit. The high rates should serve to remind you to pay it off right away, rather than pay those fees.
After Bankruptcy, Rebuild Your Credit with a Bank Account
One of the first Rebuild Your Credit tools you will need after a liquidation bankruptcy is a bank account. If you have managed to keep more than one, pare down to no more than one savings and once checking account. If you do not have a bank account, right after bankruptcy there is a good chance you will get a cold shoulder at the banks and credit unions, yet you need to have one to rebuild credit, so what are you to do?
One Internet bank will do it for you all by phone. USAA Federal Savings Bank uses tele chek and not the usual chex system of the other banks, and so anyone can get an account at this online bank. Call and ask for a membership number- tell them you need to get a checking account with them. With a small deposit by credit card, they will set up your card while you are on the telephone. In a few days you will have a bank account online.
Rebuilding Your Credit After Bankruptcy by Leasing
You never want to buy anything you cannot afford or do not need. But a computer may well be a job necessity. Furniture and Electronics like computers can be leased, and often leased to own at aaronrents at this store and they do not check your credit. With 1700 stores nationwide, there is an aarons most likely in any moderate sized town near you; of course they are also online. If you don't yet have a computer you can use one for free at the local library. Other similar stores that do not check for credit can be found at www.Badcock.com and www.buddyrents.com.
If you are even remotely likely to not be able to make a payment, then just go without. But if you can make twice the payments agreed to -- and pay it off long before it comes due -- these payments will be reflected on your credit, and likely start that upward trajectory for rebuilding your credit.
Rebuilding Your Credit With Automobile and Home Loans
Car loans are relatively easy to get after bankruptcy; rebuilding your credit this way, you will likely have the luxury of shopping for deals. The reason is that automobile loans last less than the 8 years that must pass before you could declare bankruptcy again. That legal constraint removes much of the risk that your bankruptcy would otherwise pose.
A conventional mortgage on a home will not be avaialble until your credit starts to come back, but you can find rent-to-own deals in any real estate market, often with a small enough amount down that you can afford it. In these types of deals you pay rent, and an agreed upon portion of that loan is set aside as money towards the purchase; which comes later, when your credit score has improved.
If you rent to own after bankruptcy, rebuild your credit by making sure you get "credit" for your regular rental payments, as well as other regular payments for which you might not be getting credit. Especially on lease to own situations, where you will be trying to get your credit up in 18 months, you need to use PRBC.
PRBC is the alternative credit bureau. It was developed in 2002, and unlike the three major credit reporting companies, you the consumer can also report to them. PRBC was developed expressly to track good rental histories for renters; the initials originally stood for Pay Rent, Build Credit. The name change to PRBCwas because other regular bills were also a credit builder, things like insurance, ultlites, and and cable bills.