Rebuilding credit after bankruptcy
At one time filing for Chapter 7 Bankruptcy was the equivalent of a “Scarlet letter.” Something to be ashamed of, not unlike a criminal record, but not anymore. In recent years, with millions of new people filing for bankruptcy every year, breaking new records, it’s just not the big deal it once was. It no longer carries the stigma it used to. People from all walks of life, from low-life bums to highly successful business people have filed at one time or another.
Bankruptcy is also not the worse thing to have on your credit report. A bank repossession, default on a student loan, or mortgage forclosure, or eviction is actually far worse. Bankruptcy is simply a legal way out for many Americans who got in way over their heads and need a fresh start.
For most people who filed for personal chapter 7 or 13, the most common and easiest way to rebuild credit is by getting a credit card, and using it responsibly. Those with really bad credit may only be able to quality for a secured credit card, while those who’s credit is otherwise not too bad, should be able to qualify for an unsecured card, allbeit, it will always usually come with an annual fee and high interest.
Household/Orchard Bank is an excellent place to begin.
If you’re chapter 13, then you were required to make payments to your creditors. Unfortunately, banks and loaning companies do not consider this rebuilding your credit. The credit rebuilding phase actually begins from the date your bankruptcy was discharged.
If you’re chapter 7, then rebuilding your credit is actually much easier and won’t take as long, since in chapter 7, you owe your creditors nothing, so discharge of bankruptcy occurs just a couple weeks after you filed. This is one of the big advantages of filing chapter 7. In chapter 7, you can choose to keep some of your lines of credit to help you rebuild your credit.
For whatever chapter you choose, a day will come when you’re fully discharged.
Since bankruptcy is public records, creditors looking for your business will likely mail you “pre-approved” credit card offers, but beware of scams! There are unscrupulous companies who use false or deceptive advertising to make you think you’re getting a major credit card when you end up getting a merchants card that you can only use to buy their products. Make absolutely sure you are getting a real “Visa” or “Mastercard.”
Avoid companies with names like “First National Credit,” etc.. It’s always highly recommended you first check them out at ripoffreport.com or bbb.org.
Make sure the credit card will report your payment history to the 3 credit bureaus, else what’s the point? Your credit history should always be reported to all 3 bureaus.
The easiest way to rebuild your credit after bankruptcy is to get a credit card and use it responsibly. Most people who have been through a Chapter 7 Bankruptcy should be able to qualify for an unsecured credit card, although usually with a small limit at first - usually $500.00, and very high interest.
