It’s a persisting myth that people cannot buy cars, houses, or even obtain credit cards after bankruptcy. Though lenders will most likely consider you a higher risk after filing, many people are able to do these things in a relatively short period of time. However, you will likely have to pay higher interest rates, make larger down payments, or possibly even have a cosigner for credit you obtain. Luckily, by carefully rebuilding your credit, you can quickly show lenders that you are no longer a risk. An experienced bankruptcy attorney at JRQ & Associates will go over all of this information and more, so that you understand how to rebuild your credit as quickly as possible.
Understanding the Credit Rating Process
Lenders, property owners and others who extend credit and provide services often use credit scores to determine the likelihood of whether you will default or pay your bills on time. As a rule, a credit score of 650 or higher will allow you to receive favorable interest rates and other lending terms. A bankruptcy can stay on your credit report for up to ten years, and undoubtedly affects your credit score. However, understanding your credit score will be the first step in rebuilding your credit following bankruptcy.
Take the time to get copies of your credit reports from the Big Three Credit Bureaus, which include Experian, Equifax and TransUnion. Reviewing your credit report will allow you to clearly understand which financial activities negatively or positively impact your score, so that you can plan accordingly with regards to future financial decisions. Furthermore, it is a good policy to regularly review your credit report in order to ensure that errors, or inaccurate info is not further bringing down your score.
Avoid Credit Repair Agencies and Payday Loans
It’s possible that you may be tempted to apply for pay day loans and other cash advances after bankruptcy. However, the legal agreements governing these loans often have expensive hidden fees and you can end up owing way more than you borrowed, which could potentially cause additional issues for your credit score. Similarly, many credit counselors suggest avoiding credit repair agencies that sound too good to be true. Ultimately, there isn’t anything that these credit repair agencies can do to improve your credit that you can’t do on your own or with the assistance of an attorney. Payday loan companies and credit repair agencies understand the stress associated with bad credit and often take advantage of those who need financial assistance the most.
Focus On Quickly Rebuilding Credit
After your bankruptcy, you should be able to rebuild your credit pretty quickly by making regular, on-time payments and developing a good payment history for all of your credit. Following your bankruptcy discharge, it may be a good idea to apply for a secured credit card in order to create a new credit history that illustrates your ability to promptly make payments every month. It’s important to stick with a reputable lender as there are many lenders that take advantage of their customers. Also, make sure that the issuer of your credit card actively reports to the Big Three Credit Bureaus, so that proof of your timely payments is reflected in your credit score.
Contact an experienced bankruptcy attorney at JRQ & Associates today.
Deciding to file for bankruptcy can be a stressful time in your life. Luckily, the experienced bankruptcy attorneys here at JRQ & Associates can be there during every step of the bankruptcy process. Contact JRQ & Associates today to set up a free bankruptcy consultation with one of our experienced bankruptcy attorneys. We will discuss your financial difficulties and give you all possible options to resolve those issues.