After filing for bankruptcy, consumers do not have to live without credit. By taking certain steps, people who have filed for bankruptcy can start to rebuild their credit.
Many people worry about getting their credit back on track after filing for bankruptcy. After a bankruptcy, it might be hard to start to rebuild your credit, but it's not impossible. You'll see right away that you'll have to pay more in interest. Because you have filed for bankruptcy, your creditors see you as a risk. As soon as you start to rebuild your credit and show creditors that you are a responsible spender, your interest rates will start to go down.
After you file for bankruptcy, you'll want to move quickly to rebuild your credit. But it would be better to take your time. If you have filed for Chapter 13, your first priority should be to make your monthly payments. Before applying for new credit, it's best to wait at least 18 months. But if you still have other debts when that time comes, you should wait until you don't have any more to worry about.
Getting a secured credit card is the best way to start to rebuild your credit after filing for bankruptcy. (You can find some of these cards at http://www.credit-card-after-bankruptcy.com.) You should not do this until all of your debts have been paid off. With a secured credit card, you put money into an account that acts as security for your credit card. Your credit limit will be between 50% and 100% of the amount you put down. Some banks give you interest on your deposit and let you choose between a savings account, a money market account, or a certificate of deposit.
When you apply for a secured credit card, you should know that you will have to pay fees. Most of the time, these secured credit cards come with extra fees that need to be paid. Fees for the application and processing must be paid up front. Most secured credit cards also charge a fee every year. When you are looking for a secured credit card, compare the total amount of fees you will have to pay.
After you have used your secured credit card for about a year or two and have built up a good credit history, you may be able to get an unsecured credit card. In the meantime, if you always pay your bills on time, creditors will often raise your credit limit.
If you file for bankruptcy, the lender will decide if you can get a loan to buy a car or a house. Some lenders will work with people who just filed for bankruptcy, while others won't. Even if you have a good credit score, you should know that a recent bankruptcy will affect your interest rate.
It is possible to get good credit after filing for bankruptcy. Make sure you spend your money wisely, and you'll find that you can get more and more credit as time goes on.
