First steps
Bankruptcy doesn't
automatically bar you from obtaining credit
for the next seven years. You'll be able to
start again as soon as you establish a
consistent track record of good credit
management. This should be the most
important financial priority in your life.
It might take a few years, but you can raise
your credit score and demonstrate that
you've become a responsible borrower.
First, address any spending issues by
creating a realistic personal budget. Set
aside amounts for your bills first, savings
second, and discretionary spending last.
Then, open a savings account and establish
an automatic deposit program. You should
also pay your rent and utility bills on time
every month. One of the best ways to do this
is to set up automatic payments through an
online bill service. Many utility companies
will also accept direct debits from your
checking account.
Moving forward
Once you have your bill
paying and savings deposits on autopilot,
consider obtaining a secured credit card.
Just about anyone can get one these days,
because it's backed by money you place on
deposit with the credit card company. If you
don't pay your bill, the company just takes
your deposit. But that won't happen to you,
right? (Not after your bankruptcy ordeal.)
Every month that you pay the bill on time is
another month toward building a good credit
history. Some companies will eventually
eliminate the deposit requirement, which
basically converts your secured card to one
that's conventional and unsecured.
Even if you have just been discharged from a
bankruptcy, you can still get a
car loan. The only catch
is that if you are getting a car loan close
in time to when you completed your
bankruptcy, you will probably have to pay a
higher interest rate. To get a car loan
after a bankruptcy, you will probably need
some proof that you have income-- i.e.. from
employment or some other source of income.
You may have to wait for
two to four years before you can apply for a
mortgage without the bankruptcy being a
factor in the mortgage application-- This is
the FHA's guidelines. Keep in mind-- after
having completed a bankruptcy, in some ways
you are a better credit risk because you now
have no (or very little) outstanding debt.
