As far as credit is concerned, it is not written in stone that you have been bankrupt. Legally, this fact may remain on your credit record for some years, in some cases up to 10 years, but you can start improving your credit score the very day that the bankruptcy case is closed. The ways to do this are pretty obvious. You need to make sure you pay all your bills on time, and you also need to apply for credit before you can begin building your credit score again.
Living totally on a cash basis will not help you build your credit score, although for some people who really struggle to control their spending, this is understandably the way to go. However, if you are able to handle credit wisely, then apply for a secured credit card, which is one that you pay for up front, so for example, you may put $500 on it, and you will be able to use it to purchase anything up to this cost using this card. Do note that not all secured cards are the same, as there are sometimes charges involved with putting money on the card in the first place, but as it will help you to establish your credit score again, it is worth the fees involved.
However, using the card for many smaller purchases over a few weeks may be a little advantageous, as far as rebuilding your credit score goes. You will no doubt be offered a regular credit card again at some stage, probably sooner than you think, although it may have low limits and a high interest rate to start with. This gives you the chance to improve your rating by carefully managing your new credit. Never use more than 50% of the credit available to you, and always pay your card promptly and in full – you don’t want to be carrying a balance as this may be how you got into bankruptcy in the first place!
By using your credit wisely, you will remain free from the pressures and stresses of having to deal with the debt, and your credit score will begin to increase. And there are various reports that suggest that you will be able to get a loan for a mortgage in only 2 or 3 years after you have been discharged from bankruptcy, and without penalties. You will probably have the lender far more interested in the amount of your down payment, and how stable your income is, along with the proportion of your income that the loan payments will take. So if you get all these in order, you should be in a good situation.
So, if you have been discharged from bankruptcy, you have been given the chance to start all over again, without the burden of that debt – make the most of it, but make sure your finances stay in good order as you increase your credit score.
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