Five Steps to Improve Your Credit After a Bankruptcy
Credit may be the last thing on your mind if you have just been through a bankruptcy.
After all, using too much credit is what got you into financial trouble so bad that you ended up having to go through the horrible experience of a bankruptcy.
While you may want to stay as far away from credit as you can, the truth is that you need to begin reestablishing yourself now or your credit score will never see much improvement.
Not only does having a bad credit score impact your ability to buy a car or home, it also can stand in the way of being hired for your dream job.
A low FICO score impedes your ability to build wealth because you will pay higher interest rates on loans and higher rates on your insurance.
Let's take a look at five steps that you can take to improve your credit after a bankruptcy.
1.
The first thing that you will want to do is get copies of your credit reports from all three of the credit bureaus.
Review them very carefully for errors.
You will probably find quite a few accounts that were discharged in your bankruptcy filing that are still being reported as open and currently past due.
You will want to send a letter to the credit bureaus via certified mail.
Be sure to include a copy of your bankruptcy discharge to make sure these accounts are corrected the first time that you dispute.
2.
Get a bank account.
If your bank account was closed during your bankruptcy, you will need to get a new account.
While large commercial banks may be unwilling to lend to you, smaller banks are more likely to grant you an account.
There are even a few banks out there that have programs designed specifically for bad credit.
While getting a new bank account doesn't actually help your credit score, it is important in your ability to pay any new credit you get and resume a normal financial life.
3.
Once you have established a banking relationship, go get a CD loan with your bank.
You will have to pay interest on your own money but it is a fantastic way to buy your credit back.
It is a good idea to take the proceeds and open a separate account just to pay the loan.
4.
Open a secured credit card.
Shop around and find one with fees that are reasonable that reports to all three credit bureaus.
5.
Do you have a parent or spouse with good credit? If so, you can piggy back off of them.
Get them to add you as an authorized user on their account so that you can benefit from their good history.
After all, using too much credit is what got you into financial trouble so bad that you ended up having to go through the horrible experience of a bankruptcy.
While you may want to stay as far away from credit as you can, the truth is that you need to begin reestablishing yourself now or your credit score will never see much improvement.
Not only does having a bad credit score impact your ability to buy a car or home, it also can stand in the way of being hired for your dream job.
A low FICO score impedes your ability to build wealth because you will pay higher interest rates on loans and higher rates on your insurance.
Let's take a look at five steps that you can take to improve your credit after a bankruptcy.
1.
The first thing that you will want to do is get copies of your credit reports from all three of the credit bureaus.
Review them very carefully for errors.
You will probably find quite a few accounts that were discharged in your bankruptcy filing that are still being reported as open and currently past due.
You will want to send a letter to the credit bureaus via certified mail.
Be sure to include a copy of your bankruptcy discharge to make sure these accounts are corrected the first time that you dispute.
2.
Get a bank account.
If your bank account was closed during your bankruptcy, you will need to get a new account.
While large commercial banks may be unwilling to lend to you, smaller banks are more likely to grant you an account.
There are even a few banks out there that have programs designed specifically for bad credit.
While getting a new bank account doesn't actually help your credit score, it is important in your ability to pay any new credit you get and resume a normal financial life.
3.
Once you have established a banking relationship, go get a CD loan with your bank.
You will have to pay interest on your own money but it is a fantastic way to buy your credit back.
It is a good idea to take the proceeds and open a separate account just to pay the loan.
4.
Open a secured credit card.
Shop around and find one with fees that are reasonable that reports to all three credit bureaus.
5.
Do you have a parent or spouse with good credit? If so, you can piggy back off of them.
Get them to add you as an authorized user on their account so that you can benefit from their good history.
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