How Do We Build Up Credit Again After Bankruptcy?
I generally don't advise people to open credit card accounts they don't need, just to build or rebuild a good credit score. Do you have a card already? If so, your best option would probably be to pay down the balance on the card you have. If you reduce the balance and continue to make your payments on time (for the credit card as well as the mortgage loan), your score will generally improve.
The bankruptcy filing will stay on your credit report for seven to ten years. Ten years is the legal limit, but depending on the type of bankruptcy you filed (Chapter 7 or 13), it could come off your reports after seven years. With that being said, the bankruptcy will have less of an impact on your credit score as time goes on. So even while bankruptcies follow you for several years after filing, it's not the end of your credit world.
I have a friend who filed bankruptcy years ago, and he is a real-life example of this. He gradually improved his credit score over time, and then when the bankruptcy finally came off his credit report the score went up even more.
If you don't currently have a credit card, and you decide to open one, I would urge you to keep the balance low. Use it for small purchases a few times a year, and pay the balance off each month. By making regular payments and keeping the balance low, you can gradually improve your score. But keep in mind the statement I began this response with -- I don't recommend opening a new credit card unless you need one. If you already have a card, pay the balance down to about 10% or 15% of the available limit (or even lower, if you can), and continue to make all your payments on time.
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Hope that helps you out some. Good luck in 2009. I hope things work out for you.
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posted by Brandon at
4:30 PM
