If you have recently gone through bankruptcy, it's a good bet your credit scores have suffered a bit. If you wish to buy a home or refinance in the future, it's critical that you begin rebuilding your credit as soon as possible so your scores recover quickly. Though time will "heal" much of the damage on its own, it's still important to take some steps to help things along. The faster your scores recover, the easier you'll be able to get a great mortgage in the future.
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) Clear up open derogatory accounts. Even if all your debt was wiped out in the bankruptcy, it's not unusual to see old accounts being reported as collections or charge offs long after the discharge date. These don't necessarily go away on their own, so it's important to do what you can to clear them up so they don't cause any issues when you want to apply for a loan in the future. If you do owe on a collection account, you may be able to negotiate a reduced payoff with the collection agency, just be sure to get any agreement in writing before you put a check in the mail.
3) Make your payments on time without fail. This is an obvious one, but it's important to mention because it's super important. Lenders will want to see that you've reestablished a good payment history since the bankruptcy, and even one late payment could make it tough to qualify for a loan.
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) Shy away from closing older accounts. The credit bureaus like to see long credit histories, so so don't be quick to close old accounts. If you shorten your credit history, you could be damaging 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) Clear up open derogatory accounts. Even if all your debt was wiped out in the bankruptcy, it's not unusual to see old accounts being reported as collections or charge offs long after the discharge date. These don't necessarily go away on their own, so it's important to do what you can to clear them up so they don't cause any issues when you want to apply for a loan in the future. If you do owe on a collection account, you may be able to negotiate a reduced payoff with the collection agency, just be sure to get any agreement in writing before you put a check in the mail.
3) Make your payments on time without fail. This is an obvious one, but it's important to mention because it's super important. Lenders will want to see that you've reestablished a good payment history since the bankruptcy, and even one late payment could make it tough to qualify for a loan.
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) Shy away from closing older accounts. The credit bureaus like to see long credit histories, so so don't be quick to close old accounts. If you shorten your credit history, you could be damaging 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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Can I buy a home after bankruptcy? Find out when you can qualify for a mortgage after a bankruptcy.
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