Rebuilding Credit After Bankruptcy

Good News – Rebuilding Credit is Possible in as Little as 2 Years!

Maybe you have heard it before – filing for bankruptcy ruins your credit and don’t even think about rebuilding credit for at least ten years.  This is false and perhaps the most popular myth about filing bankruptcy.  Credit card companies, debt consolidation companies and others, all have an interest in keeping people from filing bankruptcy, and they absolutely love this myth.  However, remember – it is not true.

Former bankruptcy filers can establish a good credit score in less than two years after discharge.  Former debtors can also receive low rates on car or home loans after rebuilding credit in as little as two years.  Like many things in life, the credit score a former debtor obtains depends on how much work and discipline a person is willing to put in.

After receiving one’s discharge, a debtor will almost immediately begin receiving offers to obtain credit – usually first through buy here/pay here car dealers.  Other offers many discharged debtors receive are for secured credit cards.  Secured cards can help you build your credit if it reports to the credit bureaus.  Secured cards require you to pay an upfront security deposit, usually a few hundred dollars, which the card issuer holds as collateral.  Some secured creditors will offer credit after responsible use of the secured card is shown for six months or so.

I encourage debtors that are concerned with rebuilding credit to be responsible with whatever credit they receive after discharge.  Whether it is with a car payment or a credit card, I encourage clients that want to rebuild their credit to pay their monthly payments on time, in full every month.   Delinquent payments have the biggest negative impact on your credit score.  Consider setting your bills up for automatic withdrawal to make sure you don’t forget to pay on time.

Do you have more debt than you can handle, but have been afraid to file for bankruptcy because you believed the myth?