If you've been through bankruptcy recently, it's pretty likely your credit scores have suffered a bit. If your plan is to buy a home or refinance in the future, it's important to begin working on rebuilding your credit right away so your scores recover sooner. Though much of the damage to your credit will "heal" on its own as time passes, it's still important to do what you can to help things along. The faster your credit recovers, the easier it will be to qualify for a great mortgage down the road.
The following are a few straightforward ideas for rebuilding your credit more quickly after a bankruptcy:
1) Check your credit regularly and fix any problems right away. You're entitled by federal law to obtain a copy of your report once per year from AnnualCreditReport.com, but it's a good idea to check it more often than that. If you find errors, contact the appropriate reporting agency and get it cleared up as soon as possible. Contact information for all three major reporting agencies can usually be found in the report or online.
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) Get all payments in on time without fail. This might seem like an obvious tip, but it's worth a mention because it's very important. Lenders will want to see that you've reestablished your credit with a good payment history, and if you've missed even a single payment, it could make it tough to qualify for a mortgage.
4) Stay below 30% of the limits on your credit cards. Because the bankruptcy is pulling down your scores, it's important to make sure everything else in your credit file looks as good as possible. If you have high balances on your credit cards, they could be making you look "maxed out" and be causing some serious damage to your scores. Keep your balances below 30% of the limits at all times, even if you pay your balances in full every month.
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.
Hopefully these tips help! Again, time is the main "healer" of damage after a bankruptcy, but there's still some things you can do help your credit recover faster. The sooner your credit recovers, the easier it will be to qualify for a great mortgage deal down the line.
The following are a few straightforward ideas for rebuilding your credit more quickly after a bankruptcy:
1) Check your credit regularly and fix any problems right away. You're entitled by federal law to obtain a copy of your report once per year from AnnualCreditReport.com, but it's a good idea to check it more often than that. If you find errors, contact the appropriate reporting agency and get it cleared up as soon as possible. Contact information for all three major reporting agencies can usually be found in the report or online.
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) Get all payments in on time without fail. This might seem like an obvious tip, but it's worth a mention because it's very important. Lenders will want to see that you've reestablished your credit with a good payment history, and if you've missed even a single payment, it could make it tough to qualify for a mortgage.
4) Stay below 30% of the limits on your credit cards. Because the bankruptcy is pulling down your scores, it's important to make sure everything else in your credit file looks as good as possible. If you have high balances on your credit cards, they could be making you look "maxed out" and be causing some serious damage to your scores. Keep your balances below 30% of the limits at all times, even if you pay your balances in full every month.
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.
Hopefully these tips help! Again, time is the main "healer" of damage after a bankruptcy, but there's still some things you can do help your credit recover faster. The sooner your credit recovers, the easier it will be to qualify for a great mortgage deal down the line.
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