Rebuilding Your Credit Score After Bankruptcy

For many people who are beginning the bankruptcy process, the looming question they ask about the future is, “How will I ever have good credit again?” It’s a good question. Credit, after all, is what makes our world go around. You need credit for all kinds of crucial reasons, from getting a decent job to renting a place to live. And, of course, should you ever need a loan, you definitely want to have a good credit score in order to avoid through-the-roof interest rates!

The good news for you is that even after filing for bankruptcy, you can still have a good credit score bóng đá trực tiếp. And, with the right approach, and smart money management, getting a good credit score shouldn’t take too long! This article will help walk you through the process of re-establishing your credit score in your new post-bankruptcy life!

Areas of Focus

Of course, you aren’t going to be able to get credit immediately after filing for bankruptcy. So, one of the best ways to get started is with the murky in-between interstitial waters of credit and debit: the secured credit card. The secured card functions like a credit card, but isn’t truly a credit card because you front the money. It’s a safe way for a lending institution to “give you credit” because should you default, they already have the money to cover you. Paying off one of these cards on time and in full is a great way to build rapport with a lender, and to boost your credit score.

After a while, you’ll be able to get an unsecured credit card (read: a good, old-fashioned credit card). Because your score is still low, the interest rates will be astronomical… which is fine, as long as you’re paying off your balance at the end of every month! This is a big step in getting back in the credit game.

Try seeking a loan from a major lending institution. While you may have your own reasons for wanting to get a loan from a local or small creditor, it’s recommended that you go after the big names. Right now, after coming out of bankruptcy, your focus is boosting a score. And, that process is most effective when you are borrowing from bigger institutions.

What exactly is a credit score? It’s actually pretty simple, but because so much goes into it, and because so much depends on it, credit scores can be overwhelming. A credit score can be used to determine whether or not you get the new car you’ve been wanting, get a good interest rate, get the job you need, get utilities turned on deposit-free or get to live in a certain house.

Your score is a numerical representation of your lending risk. That is, how risky it would be for a lender to loan you money. The higher (the better) your credit score, the lower the predicted risk, or the more likely you are to get that loan (and a good rate), or to get that job, house or car.

The dominant scoring system is the FICO Score, and you have three credit scores, one from each of the three major credit reporting agencies (Equifax, Transunion and Experian). Because each agency considers the data it has differently, your scores may vary slightly between agencies. The score is a three-digit number, ranging from 300 to 900 (most people are 600 to 800), and the higher your score, the better.

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