If you have recently gone through bankruptcy, it's a good bet your credit scores have suffered a bit. If you wish to buy a home or refinance in the future, it's critical that you begin rebuilding your credit as soon as possible so your scores recover quickly. Though time will "heal" much of the damage on its own, it's still important to take some steps to help things along. The faster your scores recover, the easier you'll be able to get a great mortgage in the future.
The following are some simple things you can do to help speed up your credit's "healing" process after a bankruptcy:
1) Check your credit regularly and fix any problems right away. You're entitled by federal law to obtain a copy of your report once per year from AnnualCreditReport.com, but it's a good idea to check it more often than that. If you find errors, contact the appropriate reporting agency and get it cleared up as soon as possible. Contact information for all three major reporting agencies can usually be found in the report or online.
2) Clear up any open derogatory tradelines. Even if your debt was wiped out in it's entirety by the bankruptcy, it's common for old accounts to report as collections or charge offs long after the bankruptcy was discharged. These won't necessarily clear up on their own, so you may need to deal with them yourself. If you do owe on a collection account, it's possible you can negotiate the payoff balance with the collection agency, but be sure to get any agreement in writing before you write a check.
3) Get all payments in on time without fail. This might seem like an obvious tip, but it's worth a mention because it's very important. Lenders will want to see that you've reestablished your credit with a good payment history, and if you've missed even a single payment, it could make it tough to qualify for a mortgage.
4) Keep credit card balances below 30% of the limit. If you have a major ding on your credit like a bankruptcy, it's important to make sure everything else is as good as it can be to counterbalance the damage of the bankruptcy. High balances on your cards can damage your scores because it makes you look "maxed out", which is a significant risk factor for the reporting agencies and lenders. Keep your balances below 30% of the limits at all times, even if you pay your balance in full.
5) Shy away from closing older accounts. The credit bureaus like to see long credit histories, so so don't be quick to close old accounts. If you shorten your credit history, you could be damaging your scores.
6) Obtain a secured credit card. If you have a bankruptcy in your recent past, most lenders probably won't want to lend to you for a while. One way you can rebuild a good payment history is by obtaining a secured credit card. You simply deposit some cash into the bank and the lender secures the card with the deposit. After you've reestablished your credit, you may be able to convert the account to a regular credit card.
Hopefully these tips help! Again, time is the main "healer" of damage after a bankruptcy, but there's still some things you can do help your credit recover faster. The sooner your credit recovers, the easier it will be to qualify for a great mortgage deal down the line.
The following are some simple things you can do to help speed up your credit's "healing" process after a bankruptcy:
1) Check your credit regularly and fix any problems right away. You're entitled by federal law to obtain a copy of your report once per year from AnnualCreditReport.com, but it's a good idea to check it more often than that. If you find errors, contact the appropriate reporting agency and get it cleared up as soon as possible. Contact information for all three major reporting agencies can usually be found in the report or online.
2) Clear up any open derogatory tradelines. Even if your debt was wiped out in it's entirety by the bankruptcy, it's common for old accounts to report as collections or charge offs long after the bankruptcy was discharged. These won't necessarily clear up on their own, so you may need to deal with them yourself. If you do owe on a collection account, it's possible you can negotiate the payoff balance with the collection agency, but be sure to get any agreement in writing before you write a check.
3) Get all payments in on time without fail. This might seem like an obvious tip, but it's worth a mention because it's very important. Lenders will want to see that you've reestablished your credit with a good payment history, and if you've missed even a single payment, it could make it tough to qualify for a mortgage.
4) Keep credit card balances below 30% of the limit. If you have a major ding on your credit like a bankruptcy, it's important to make sure everything else is as good as it can be to counterbalance the damage of the bankruptcy. High balances on your cards can damage your scores because it makes you look "maxed out", which is a significant risk factor for the reporting agencies and lenders. Keep your balances below 30% of the limits at all times, even if you pay your balance in full.
5) Shy away from closing older accounts. The credit bureaus like to see long credit histories, so so don't be quick to close old accounts. If you shorten your credit history, you could be damaging your scores.
6) Obtain a secured credit card. If you have a bankruptcy in your recent past, most lenders probably won't want to lend to you for a while. One way you can rebuild a good payment history is by obtaining a secured credit card. You simply deposit some cash into the bank and the lender secures the card with the deposit. After you've reestablished your credit, you may be able to convert the account to a regular credit card.
Hopefully these tips help! Again, time is the main "healer" of damage after a bankruptcy, but there's still some things you can do help your credit recover faster. The sooner your credit recovers, the easier it will be to qualify for a great mortgage deal down the line.
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Can I buy a house after bankruptcy? Find out when you can qualify for a mortgage after a bankruptcy.
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