Getting Credit After Bankruptcy

by Fruzsina Csery - Date: 2006-11-27 - Word Count: 481 Share This!

Consumers do not have to live sans credit following a bankruptcy. By following certain steps consumers can begin rebuilding their credit post bankruptcy.

After filing for bankruptcy, many people are concerned about rebuilding their credit. While it might be difficult to begin rebuilding your credit after a bankruptcy, it is not entirely impossible. You will notice early on that you will have to pay higher interest rates. This is because creditors deem you as a risk because of your bankruptcy filing. Once you begin rebuilding your credit, showing creditors that you are a responsible spender, you will notice that your interest rates begin to decline.

You will want to rush to rebuild your credit after filing bankruptcy. However, it is better if you take your time. If you have filed Chapter 13, you should first focus on making your monthly payments. It is best to wait at least eighteen months before you start applying for new credit. However, if by that time you have not eliminated your other debt; you should wait more time until you do not have any other debts to worry about.

The best way to begin rebuilding your credit after bankruptcy is to obtain a secured credit card. (Selected cards can be found here: You should do this only after you have been discharged for all of your debts. With a secured credit card, you make a deposit into a savings account that is used as a security for your credit card. Your credit limit will range from fifty to one hundred percent of your deposit. Some banks pay interest on your deposit and allow you to choose between a savings account, money market account, or a certificate of deposit.

When you apply for a secured credit card, you should be prepared to pay fees for the credit card. These secured credit cards often come with additional fees that must be paid. Application and processing fees are required upfront. Most secured credit cards also require you to pay an annual fee. Compare the total amount of fees that you must pay when you are shopping around for a secured credit card.

After you maintain a positive credit history with your secured credit card for about one or two years, you will likely be eligible for an unsecured credit card. In the meantime, creditors will often increase your credit limit when you regularly make your payments on time.

Trying to finance a car or a home after filing bankruptcy will depend on the lender. Some lenders work with consumers who have recently filed bankruptcy while others will not. Be aware that a recent bankruptcy filing will have an effect on your interest rate, even if you have a favorable credit rating.

Good credit after a bankruptcy filing is attainable. Make sure that you remain responsible with your spending and with time you will find that you are able to obtain more and more credit.

Fruzsina Csery is a freelance copy writer. She occasionally writes for Autostop
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