When the federal courts finally discharge your bankruptcy and you have the discharge papers in your possession, what happens next? How can one restore his or her credit? First, you must recall why you filed for bankruptcy in the first instance. You do not wish to find yourself in a second bankruptcy situation. After bankruptcy, the first step is to begin reestablishing credit, but where to begin?
Your Credit File
Ordering your credit report from the three major credit bureaus (TransUnion, Equifax, and Experian) will allow you to determine precisely what is on your report and why.
Even if your credit score is lower than you would like, it is still preferable to be aware of it than to be in the shadows. If you don't monitor your credit report, you won't know what's on it that shouldn't be, and anything that isn't supposed to be on there could be dragging down your score. You have the right to have false information investigated and, if found to be false, withdrawn. The first step is to clear up your credit reports so that they contain accurate information.
You Are Required to Pay Your Bills
The majority of individuals believe, ""My bankruptcy and lack of credit don't matter."" This is not the case; it is important. Repairing your credit after bankruptcy is not particularly difficult, and you can likely do it faster than you might expect. However, you must always pay your obligations on time. Do not incur additional debt that you cannot repay. This is the initial stage in reestablishing credit.
Credit Application After Bankruptcy
Under no circumstances should you apply for credit, but particularly if your credit score is already low. The reason for this is that each time a lender makes a credit inquiry on your behalf, your credit score will decrease further. You cannot afford to do so at this stage of the game.
A loan application can result in multiple inquiries to the credit bureaus. Many businesses will submit your credit application to numerous lenders, resulting in numerous unwanted inquiries. Each one decreases your credit score.
Credit Card - Absolutely!
Are you crazy get a credit card? Credit cards are to blame for my current situation.
False. The credit card remains idle unless it is used, so you are responsible for this mess, not the card. There are multiple varieties of credit cards available for individuals with poor credit, and you may qualify for one. Now that you are attempting to rehabilitate your credit, it will likely be a secured card, but that's okay.
The objective is to obtain useful information from your credit report. If you want to restore your credit after bankruptcy, obtaining a credit card, even a secured one, is not for reckless spending. Use your new credit card easily and pay it off in full by the due date or even earlier. If you cannot accomplish it in a given month, do not use it.
Obtain A Car Loan - Easily and Wisely
Are you completely insane? Credit cards are now auto loans. This is a great method to rebuild your credit if you wish to do so. You must obtain as much accurate information as feasible on your credit report. Get a car loan. You may need some money for a down payment, but you can obtain an auto loan immediately after your bankruptcy is discharged.
Remember what I said about always paying your debts on time. Start modest by purchasing a vehicle for which you are confident you can make the monthly payments without difficulty. Do not visit a purchase here, pay here auto dealer, as they do not typically report to credit bureaus. There are auto dealers who work with lenders who specialize in obtaining loans for individuals with discharged bankruptcy or poor credit. Find a dealer and purchase a car that you can pay on time each month. Don't be ashamed to tell the dealer about your financial situation; doing so will make purchasing a car much simpler in the end. Ask the merchant if the lender they utilize reports to the credit bureaus.
The interest rate will be substantial. But if you consistently make payments on time, this will reflect positively on your credit report. If you have extra cash flow in a given month, it would be prudent to make additional payments. If possible, paying off your auto loan early will help you rehabilitate your credit. Then and only then, trade it in and repeat the process. You are well on your way to reestablishing your credit at this point.
Filing Chapter 7 or Chapter 13 bankruptcies is not the end of a person's excellent credit; it only appears to be. You can prevail, but you will need discipline and persistence. You didn't get here in two years, and you won't be able to repair it in two years either. If you take these actions, you will be well on your way to establishing improved credit. After bankruptcy, repairing your credit is merely a matter of time and effort on your part.
" - https://www.affordablecebu.com/