Starting Over: A Guide to Building Credit After Bankruptcy

Filing for bankruptcy can be embarrassing, disappointing, and downright upsetting. Then comes the hard part: building credit after bankruptcy. Although difficult, recovering from bankruptcy is not impossible. The key is being committed to a healthy financial future. In this article, we'll discuss the strategies that you need to use to rebuild your credit post-bankruptcy. Bankruptcy and Your Credit Report When you file for bankruptcy, it stays on your credit report for ten years. Although this does put a damper on your credit score, you can still increase it by using careful strategies to increase the number of positive remarks. This will help offset the negative effect that bankruptcy can have on your credit score. Building Credit After Bankruptcy Having a steady income is the most important factor in rebuilding your credit. If you take on debt without a guaranteed income, the chances of your credit score dropping again are much higher. Here are some tools you can use for bankruptcy recovery: Secured Credit Cards Getting credit cards post-bankruptcy is close to impossible, but you may qualify for a secured credit card. These cards require a down payment before the bank will extend a credit line to you. This gives the bank a guarantee that they will be able to cover the debt should you not be able to pay off your card. Keep in mind that these cards aren't free and usually have high interest rates or annual fees and should only be used temporarily to rebuild your score. Then, you can qualify for an unsecured credit card. Secured Loans Secured loans are kind of like a savings account. You qualify for a secured loan and you make monthly payments to the bank. Once you've paid the required amount, you can access the money and the bank will report your payments to the Credit Bureau. Get a Co-Signer A co-signer "loans" their credit score to you in a sense, allowing you to qualify for loans or credit cards that you otherwise wouldn't qualify for. As a result, they are responsible for the debt if you can't make payments. Ask to Be An Authorized User If you can't get a co-signer, asking to be an authorized user on an account might be an alternative. When you become an authorized user on an account, the original user's payments are reported on your credit report, as well. If you don't know someone who will allow you to become an authorized user, you can also purchase tradelines. This allows you to become an authorized user on a good standing account without having to ask someone you know. Superior Tradelines makes purchasing credit tradelines for sale easy. How to Build Credit After Chapter 7: It's Possible Bottom line is: building credit after bankruptcy is totally possible. By using secured cards or loans, getting a co-signer, becoming an authorized user, or purchasing a tradeline, you can slowly but surely rebuild your credit. If you're interested in learning more about finance, lifestyle, and other topics, check out Devote.se.