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Rebuilding your credit after your bankruptcy has been discharged may be preoccupying your thoughts lately. Knowing what credit insiders know about reestablishing yourself as a low risk to lenders can give you the upper hand in getting your credit file back in tip-top shape.
Secured Credit Card Accounts
As soon as possible following the discharge of your bankruptcy, establish one or two secured credit card accounts with an online lender. There are multitudes of creditors who offer secured credit cards, and this type of card is extremely easy to be approved for. The secured credit card is secured by a deposit that you make with the lending institution. The amount of your credit line will equal the deposit you have on record with the lender.
Use your secured credit card account wisely; potential lenders look to see the amount of debt you have as compared to the limit of credit you have available. If you have a secured credit card with a limit of $2000, for example, and your balance is $500 - then your debt to limit ratio is 25%, which falls below the recommended 35% or less than lenders want to see. On the other hand, if you have two secured credit cards with combined limits of $1000, and your balance is $400, then you would appear less appealing to potential lenders because your debt to limit ratio would be 40%.
Run a Tab
Do not pay your balance off in full each month; doing so can be detrimental to your credit score. Although one would think that it looks good to lenders to see a borrower who pays off their debt fast, on the contrary, this type of payment does not show a solid payment history of timely payments. Always leave a balance on your card, even if it is just a couple of hundred dollars.
Apply Online for Best Rates
There are many fine lenders that do business mainly online that are trained extensively in servicing post-bankruptcy secured credit cards. These lenders have the expertise to help you get the best secured credit card on the market - thus saving you money on interest and account fees. With user-friendly websites that offer secure applications, online lenders are the most convenient sources of secured credit cards after bankruptcy.
Open Diverse Accounts
Be sure not to limit your rebuilding to just credit cards. Lenders want to see that you can manage multiple types of payments. Diversity in account type is important when considering your creditworthiness because it shows that you are capable of handling varied types of credit in a responsible fashion.
Other types of loans you might want to consider to diversify your credit profile include bad credit automobile loans, bad credit tenant loans, and bad credit personal loans. There are many online lenders who offer these loans specifically for those who have recently been through a bankruptcy proceeding.
Make a Fresh Start
When your bankruptcy is discharged, you become in control of your financial future. It is during this time that you should become proactive in your quest to raise your credit score and thus make yourself more likely to be approved for nearly any type of credit you desire, including a mortgage on a home. The most important part of rebuilding your credit once you've established yourself with new lenders is to make your payments on time, every time that a payment is due. Even one late payment can take dozens of points away from your score. |
