Many people are surprised to learn that in many cases they may be better credit risks after bankruptcy. After all, you are largely debt free and a better risk so long as you have enough income to cover future obligations. For instance, most bankrupts can obtain a mortgage at or near market-rate interest after as little as two years for FHA loans or three to four years for conventional loans.
The best way to re-establish credit is to get more credit. Many banks will offer credit cards — even with no security — to recent bankrupts. Every current payment helps build your credit. Moreover, your credit score improves even more if you charge no more than 30% of your available credit. Contrary to popular belief, it doesn’t help to pay it off every month and it does help to leave a small balance so long as you aren’t using more than 30% of your available credit.
There are many online sites that provide listings of creditors willing to provide new credit to people with poor credit scores. There are even many banks that will provide you with unsecured credit lines — just try Googling “bankruptcy credit cards.” Two of the more prominent banks offering unsecured credit cards are Capital One and Barclay Bank. These banks usually will offer credit cards — unsecured credit lines — even before your bankruptcy is discharged. These cards usually carry low credit limits at first but the limit usually increases steadily as you make monthly payments on time. Again, the key is to never charge more than 30% of your credit limit and pay the card off every month.
Another excellent and proven method to improve your credit score it to sign up at a credit union, put about $1,000 or more in a savings account, then take a loan out from the credit union using the savings account as collateral. Then, make monthly payments on the loan as scheduled.
Plenty of local car dealerships also offer financing through local banks for people who have filed bankruptcy. Your payment history on a car loan helps you re-establish your credit. Often, in as little as six months after a bankruptcy filing, your credit score can be higher than it was before you filed bankruptcy. If you follow the instructions in this article, a 700 credit score in two years is possible.