Filing for bankruptcy is a big step for most people. While there are some debt relief options that can help avoid bankruptcy, filing for bankruptcy is sometimes the only option available. Delinquent credit cards, home foreclosures, and outstanding hospital expenses are just a few reasons that can lead a person to file bankruptcy. While bankruptcy can relieve a good part of a person's debts, it's the credit report that takes the big hit. Common knowledge is that filing for bankruptcy severely hurts a person's credit score and for even as long as seven years. Despite this notion though, it's possible one can emerge from bankruptcy with a decent credit score.
The key to is establishing a plan for rebuilding credit, diligently following it, and being responsible along the way. Going through bankruptcy is not an easy process, but the lessons learned through it can put a person on the road to financial freedom via new-found responsibility.
The 1st step in rebuilding a person's credit is to secure new credit and use it " wisely. There are a number of successful strategies that can be employed to start building a positive credit history. The first is applying for a secured credit card. These credit cards maximize your credit limit to the amount of money you have deposited in the bank. They are a lot easier to get than unsecured (or traditional) credit cards. Before applying for a secured credit card, verify the annual fee is acceptable and that the company reports directly to the major credit bureaus. This will allow you "as you make payments" to establish a steady payment history.
A 2nd option is getting loans with installment payments can help rebuild credit as well. An installment loan has a fixed amount due each month and a term for repaying the debt. Common types of installment loans are auto, boat, and mortgage loans. By faithfully paying each month, you can show your credit worthiness and build a track record of on time payments. Student loans can also serve as an installment loan, and paying each month will help to build one's credit score. Securing an installment loan after bankruptcy is not without its ill-effects. Interest rates will more than likely be high. However, after a year or two of making payments on time, a person may be able to refinance to a lower rate. In the long-term, the responsible use of installment loans will help a person secure better loan rates and terms.
A 3rd strategy for rebuilding good credit is analyzing a persons credit report. Often there are times when errors exist in a credit report which could reflect negatively on a credit score. Even having filed bankruptcy, a person may find that some debts included show as past due or still open on the report. It is important to contact the credit bureaus and dispute this information. Not only do negative items reduce a credit score, but can prevent one from securing other forms of credit in the future. Taking the time necessary to review the report(s) and correct items can save thousands of dollars over time.
While is a person is going through bankruptcy, it is important to remember that rebuilding credit is not an overnight sensation. It does takes time and every payment must be paid on time, all the time in order to rebuild good history. Establishing good spending habits and a realistic budget will help a person navigate towards a successful future. At the end, good to excellent credit is attainable that will allow one to take full advantage of excellent credit terms and conditions. - 29866
The key to is establishing a plan for rebuilding credit, diligently following it, and being responsible along the way. Going through bankruptcy is not an easy process, but the lessons learned through it can put a person on the road to financial freedom via new-found responsibility.
The 1st step in rebuilding a person's credit is to secure new credit and use it " wisely. There are a number of successful strategies that can be employed to start building a positive credit history. The first is applying for a secured credit card. These credit cards maximize your credit limit to the amount of money you have deposited in the bank. They are a lot easier to get than unsecured (or traditional) credit cards. Before applying for a secured credit card, verify the annual fee is acceptable and that the company reports directly to the major credit bureaus. This will allow you "as you make payments" to establish a steady payment history.
A 2nd option is getting loans with installment payments can help rebuild credit as well. An installment loan has a fixed amount due each month and a term for repaying the debt. Common types of installment loans are auto, boat, and mortgage loans. By faithfully paying each month, you can show your credit worthiness and build a track record of on time payments. Student loans can also serve as an installment loan, and paying each month will help to build one's credit score. Securing an installment loan after bankruptcy is not without its ill-effects. Interest rates will more than likely be high. However, after a year or two of making payments on time, a person may be able to refinance to a lower rate. In the long-term, the responsible use of installment loans will help a person secure better loan rates and terms.
A 3rd strategy for rebuilding good credit is analyzing a persons credit report. Often there are times when errors exist in a credit report which could reflect negatively on a credit score. Even having filed bankruptcy, a person may find that some debts included show as past due or still open on the report. It is important to contact the credit bureaus and dispute this information. Not only do negative items reduce a credit score, but can prevent one from securing other forms of credit in the future. Taking the time necessary to review the report(s) and correct items can save thousands of dollars over time.
While is a person is going through bankruptcy, it is important to remember that rebuilding credit is not an overnight sensation. It does takes time and every payment must be paid on time, all the time in order to rebuild good history. Establishing good spending habits and a realistic budget will help a person navigate towards a successful future. At the end, good to excellent credit is attainable that will allow one to take full advantage of excellent credit terms and conditions. - 29866
About the Author:
For help avoiding bankruptcy, Debt 1 Options can settle debt to relieve people who are overwhelmed with bills, or can help to repair credit to get personal finances back in order.
