Welcome back to our two part article on how to improve your conditions after bankruptcy. In part one, we discussed the lead up to bankruptcy, the two types of bankruptcy, and how debt is discharged from each one. We also discussed certain things that could be done to live within your means. We talked about making budgets, and plans, and sticking to them. That is the most important part, developing the discipline to make payments on time, and forego the buying of frivolous items. Look at bankruptcy as a learning experience in how to control your finances.
Now we will talk about a few more specific things that can help build credit. The first year after your debt being discharged, you may find it difficult to be qualified for a credit card, depending on your case. You may also be charged higher interest rates because of your recent bankruptcy. If you cannot receive a credit card, or the interest rates are too high, a good alternative is a secured credit card. A secured credit card works like this. I give the issuer of the card a certain amount of money, let’s say 1,000 dollars. The issuer will keep this as collateral to ensure I make the payments, and the card has a spending limit of 1,000 dollars. The issuer will report the spendings and activity so that my credit will improve. I may discontinue the card at any time as long as I have paid it off. This is a good way to begin rebuilding credit, and there’s no way you can overspend since it has a limit that is already backed by your cash.
Another important thing that will help in getting approved for future loans, is steady employment. Creditors like to see that you are able to maintain a job. This shows commitment and dedication. Do your best to maintain a steady job, and I know this is easier said than done in the present economy, but it will make a big difference.
Now for the good news. This is a breakdown of what you can expect over the first few years following bankruptcy if you follow these tips and are consistent on your payments. The first year you may have trouble getting normal credit cards and loans. By the second year though, most people are able to get regular credit cards and loans, albeit at a slightly higher rate. By the third year, things really start improving and most people are able to get loans at normal rates, even FHA home loans.
Now these tips and results may not work for everyone. But by following them you will be able to improve your credit and your financial future. Don’t let bankruptcy ruin the next ten years of your life, make it a learning experience and be better off for it.