If you are someone who has needed to file bankruptcy, I would like to first congratulate you for taking the first real step to your recovery. The decision no doubt was not an easy one, however, if you have followed the advice of a competent bankruptcy attorney, you will find that you can make a very healthy recovery and land squarely on your feet. If you act responsibly and commit to the following tips I have outlined for you, you will be the better for it in a relatively short period of time.
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You are not alone and you share the same challenges as over 1.5 million Americans in the past year and this number is not going to diminish any time in the near future. The following tips can apply to those who have a bankruptcy that has been discharged as well as for those who want to start to build some credit while they are still in bankruptcy. Should you decide to implement these tips before your bankruptcy has been discharged, this will only put you ahead of the game.
Tip #1 - Obtain Your Credit Report It is important to remember that after your bankruptcy has been discharged, it will take about 90 to 120 days for the details of all of the discharged items to begin reporting properly. It is not an automatic process. You must allow time for the courts and creditors to file the necessary documentation clearing debts and start to report correctly on your credit report. After this 90-120 day time period has passed, you will want to obtain a copy of your credit report. You will want to make sure that you obtain what is called a tri-merge. This means all three bureaus in one report. Once you receive your reports you will want to make sure that all accounts that were included in the bankruptcy are reporting correctly.
Accurate reporting for a discharged item should NOT include balances, past due amounts, and no late payments that go back prior to the bankruptcy. It is critical to your credit recovery process that ALL items included in bankruptcy are accurately reporting. If there are errors in this regard, this can be very damaging in reference to obtaining future credit. These types of errors are very common and the creditors and credit bureaus are not very efficient when it comes to accurate reporting post bankruptcy. If you are unsure of how to read your report in this regard, you will want to contact a consumer credit repair specialist for a free analysis.
Tip #2 - Obtain New Credit Obtaining new credit accounts that populate to your credit report is extremely important to your quick credit recovery. There is a popular misconception that you cannot get approved for new credit because you filed bankruptcy. Well I'm here to tell you, this is not true. Most people have heard of secured credit cards. With a secured credit card from one of the main players can help you to get ahead of the curve with rebuilding your credit, however you will want to be very careful with your debt load because it may have been this type of debt that got you in trouble to begin with.
It is important to understand that your credit score will be higher if once you receive your new line of credit with the secured cards that you don't use it up. The more unused credit that you have increases your score substantially. This is something you should look at as a short term solution as the interest rates on these types of accounts are much higher. But if managed correctly, you can move into a more attractive unsecured card within a reasonable period of time.
Tip #3 - Budget If you are feeling free and liberated because of a discharged bankruptcy, beware. Again, this is the attitude that can get you into trouble. It is important that you adopt a stingy mentality. You must become very frugal as you will need to devise a plan to have back-up cash on hand. You must not tap into your new lines of credit or create new debt that is beyond or even gets close to your comfort level to pay. This means you will need to have a budget in place that allows for you to set aside a percentage of income weekly.
You must remain consistent on this. Incidentals arise and you will need to use cash as much as possible. The idea here is to rebuild your credit by utilizing a couple of secured as well as some other credit accounts I have recommended above. You will want to over the course of 24 months, be very conscious of paying these accounts on time. These days you can even finance a vehicle while in bankruptcy. If you choose to purchase a car, just be aware that you will have to bite the bullet on very high interest rates for a couple of years.
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