7 Tips For Establishing Your Credit Again After Filing For Bankruptcy

Connie Ragen Green

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Many people believe that once they file bankruptcy they will never be able to get credit or purchase a home again. This is simply not true. Even with recent changes to the law the United States still has one of the most lenient bankruptcy programs in the world. Filing for bankruptcy can be emotionally and psychologically draining and difficult for you and your family, but if you know what to do you will be able to get on the right track again after a short time.

here are 7 tips to help you in establishing crdit again after you have filed for bankruptcy:

  1. Start to re-establish your credit as soon as possible after your bankruptcy is discharged. Ask your attorney to tell you when your case has been formally discharged. It will usually be two or three months after you go to court to discuss your case with the judge or the court’s representative.

    Many people believe that they must wait seven years to apply for any type of credit again. You only need to wait until your case has been discharged.

  2. Apply for credit at two or three places each month. If you apply to more places than that you will most likely be turned now. Many places, including national retailers, are willing to extend credit lines with limits of $200-$500 to those who have filed bankruptcy. Other places, such as furniture stores, tend to not give credit under the same circumstances. If a store turns you down for credit, wait six months and apply again.
  3. Keep track of where you have been applying and what the outcome was each time.

    Make a chart to help you stay organized. This will keep you from applying to the same place more than once or to apply too many times in a given month.

  4. Avoid credit cards with companies that charge a high annual fee or require you to pay in advance. You do not have to accept those kinds of terms to establish yourself again.

    Make it a practice to only accept credit from companies with no annual fee.

  5. Pay your monthly obligations promptly. Your credit report will now be highly scrutinized so you should pay each bill as soon as you receive it. Also, pay slightly more than the required monthly amount.

    This shows that you are able to pay on time and that you have sufficient income to meet your monthly obligations. Request your credit report from the large credit reporting companies about every three months. These reports are usually less than $10.

    Do NOT request information for free when you are denied credit. This can hurt your credit score, at least in the short run. If there are errors on your report write the company a short letter describing what is mistaken in their information. They are required by law to investigate your claim and notify you of the outcome. You do not need to pay a company to do this for you. Those companies cannot do anything for you that you are not able to do for yourself.

  6. Keep a chart showing each account you have, how much is owed, and the date the payment is due each month. Try not to owe any place more than about 20-25% of your credit limit with that company.
  7. Realize that you are fortunate to live in a country where you are able to have second chance to prove your financial worthiness. Avoid making purchases of item you can’t truly afford, such as expensive electronics or vacations. Make it a practice of saving at least 10% of what you bring home each month (your net income) and you will always have money for emergencies.
By following these tips you will be able to establish your credit again and go on to buy a home, car, or other items that will enrich your life and help you to build a solid foundation for your future. Many mortgage companies will give a home loan to someone who has had a bankruptcy discharged at least six months before they are applying. Although you must always disclose that you have filed bankruptcy, and it will stay on your credit report for seven to ten years, there is no reason that you cannot begin to enjoy the convenience of having credit again. This will make it easier for you to receive better interest rates and terms because you are showing that you can be financially responsible.

Connie Ragen Green is a Real Estate Broker and State Certified Residential Appraiser in California and has bought and sold over 100 properties since 1983. Visit her at http://www.BuyRealEstateforProfit.com for more information about buying and selling real estate.


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