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Credit After Bankruptcy

Have you declared bankruptcy? Are you worried about getting credit? Well, do not hit the panic button right away. Obtaining credit after bankruptcy is possible. In fact, it is important to restructure your credit record post bankruptcy since it is the way that creditors measure your creditworthiness. Bankruptcy delivers a heavy blow to your credit history and score. The score receives a major setback and it is important to improve the score to gain back the confidence of creditors. Bankruptcy more or less stays on your credit report for ten years; however, you can still qualify for loans and credits with good rates before the bankruptcy remark is removed.

It is extremely important to abolish the harmful credit habits that led you to opt for bankruptcy and use this time to establish good credit habits. You must pay your bills on time and avoid using your credit card to its maximum limit. When you are applying for credit after bankruptcy, remember not to apply for a huge amount because you are still a risky borrower to the creditors.  Further, in order to rebuild your credit, draw small amounts of credit at a time. Using the credit responsibly will improve your image as well as your score.

It is unsafe to repeatedly file bankruptcy. There must be a considerable period of time before you can file for credit consecutively. For instance, if you have filed for Chapter 7 which states that you will be making your nonexempt properties available to the creditors who will retain the proceeds, you have to wait four years before filing another Chapter 13 bankruptcy. If you have to file another Chapter 7, then you have to wait for eight years. If you wish to file another Chapter 13 after one Chapter 13 bankruptcy, then you have to wait for two years. Chapter 13 bankruptcy provides another repayment plan to the creditor for three to five years. However, filing credit this way is not healthy.

It is immensely important to clean your credit report after filing bankruptcy. The credit report often shows overdue and open accounts even after filing bankruptcy. Call up the credit bureaus that prepare the credit reports to let them know that these accounts have been included in the bankruptcy. This will help restore the credit reports.  If there are any other errors, make sure they remove them as well.

Secured credit cards are the best option to rebuild your credit. Home equity, student loans or auto loans help in reconstructing the credit history. When obtaining secured credit cards, make sure the companies report your payments to the major credit bureaus as they charge a reasonable annual fee without any application fee and will convert your secured credit to unsecured credit cards after you have made the payments regularly for one year.

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