Credit help: How to continue your financial life after bankruptcy ...

There is life after bankruptcy. Here are some tips to help you work your way back to financial well-being.

Declaring personal bankruptcy is devastating both financially and emotionally. But there is good news. With some careful planning and attention to detail you can repair your credit and be back on the road to financial health. Here are some tips that can help.

Credit help: How to continue your financial life after bankruptcy

1. Get a Copy of Your Credit Report

As soon as your bankruptcy is discharged, get a copy of your credit report. There are three major credit bureaus ? Experian, Equifax and TransUnion. These reports can be ordered online or you can send a request in writing. There is normally a fee for this information. However, if you apply for credit and are denied you are entitled to a copy of the report on which the lender based their decision.

You should also be aware of your FICO score. This number represents a condensed version of your credit history, considering late payments, employment history, credit history, current credit patterns and other factors. This score is calculated by each individual credit bureau and normally offered as part of the purchased credit report. The FICO score is the biggest determining factor when you are being considered for a loan or credit line.

Carefully review your credit report, looking for errors in personal information, account history that is incorrect, accounts that do not appear to be yours and other erroneous information. If you discover any errors, note them on the special form provided with the report and detail each item with an explanation of why it is incorrect. The credit bureau is obliged to review this information and respond to you within thirty days.

2. Pay Your Bills

Bankruptcy does not mean an end to bills and most people still have obligations. You will probably still have rent, utility bills, phone and cable bills to pay. Pay them on time and do not get behind. These remaining bills will be the foundation of your new credit history. Lenders understand that sometimes people find themselves in a financial bind and bankruptcy is the only way out. But if you continue to let bills slide, you will not present a convincing credit picture. This trend will be reflected in your FICO score.

3. Apply for a Secured Credit Card

Most likely you were required to surrender all of your credit cards at the time you filed for bankruptcy. This may be the most painful part of the process. But credit cards are often a necessity and the secured cards offer an opportunity to help you to start rebuilding your credit.

A secured card is one that requires that you deposit a sum of money in an account that is used as collateral. Some card issuers will match that sum, others will not. You use this card just as you do a standard credit card and are billed monthly for purchases made.

Use your favorite search engine and do some research. Make sure that you select a card from a reputable bank ? one that also offers standard cards. It should be a recognized card, either Visa or MasterCard. Read all the fine print. Once you get the card, use it prudently and try to pay the balance every month. Do not be late on the payments and do not exceed your limit. By using this card responsibly, you are proving that you are credit worthy.

Most banks will review a credit card account every 6-8 months. In the case of a secured card, a review may result in their issuing you full credit and even refunding your deposit. Normally this won?t occur in the first year and the longer you have the card and build a credit history, the more likely it will be that they will in fact release the card to you.

4. Credit Card Offers

If you receive a letter advising you that you have been pre-approved for a bank card, take them up on the offer. Again, read the fine print and be aware of hidden fees and service charges. If the deal seems solid, go for it. You may be pleasantly surprised. Banks know that you cannot declare bankruptcy for at least seven years after discharge and this ensures they will get paid one way of the other. The worse thing that can happen is that you will be turned down and then you can get a free credit report!

If you do get a card, use it responsibly and try to pay off the balance each month if you can. Use the card for things that you would normally pay cash for and set that money aside in your checking account. Again, do not be late in making your payments and NEVER use this card for a cash advance. The interest on these ?loans? is usually higher than for purchases and it is just too easy to get into the habit of doing this. You need to continue living within your means so as not to get in trouble financially again.

5. Test the Waters

For most people, transportation is one of the first challenges that they face after going bankrupt. Even if you were able to keep your vehicle, you are going to have expenses and ultimately, you will need a new car. Crazy at it sounds, it may be easier to buy a new car than to pay for repairs for the old one. This is a great way to boost your credit rating as well as your morale!

Look for a reputable dealer in your area that claims to give credit to ?almost? everyone. Most metropolitan areas have ?auto malls? where one dealership owns a variety of franchises and they usually have the best selection of pre-owned vehicles. These agencies normally have access to numerous banks and lending agencies and, because they are working on a commission, they want to find someone to loan you the money. Of course, the downside is that you are going to pay a higher interest rate than people with good credit, but it?s a start for you and eventually, you can refinance this loan at a lower rate.

Set a firm dollar amount as your maximum monthly payment and DO NOT BUDGE. Make sure the figures that they show you include all the expenses (taxes, licensing, prep, etc.) You do not want any surprises. Obviously, the newer the car, the better. Ask about the dealer?s warranty and do not buy an extended service warranty.

Once you get the vehicle you have made a huge step forward in repairing your credit history. It is critical that you pay on time, every month. Normally, after a year or so you can ?shop? the loan and try to find a lower interest rate. Try to do that until you have a rate that is comfortable.

Do not try to buy another vehicle until this loan is paid off. You will only be paying interest on interest and this compounds. Buy something that you will be comfortable driving for the length of the loan.

These guidelines are no guarantee, but most people are able to obtain credit within two years of filing for bankruptcy. In the meantime, treat this experience as a means to start fresh and use your new credit wisely. There is life after bankruptcy.

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Source: http://newsolio.com/credit-help-how-to-continue-your-financial-life-after-bankruptcy,777

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