Rebuilding Bad Credit after a Bankruptcy
Bankruptcy information can remain on your credit report for up to 10 years according to both the Bankruptcy Code and the Fair Credit Reporting Act (FCRA). But, the effects don't have to last forever, and you can immediately start rebuilding your credit by following these tips.
The first step is to clean up your credit report. In many case credit reports still show several, if not all, accounts as open and overdue instead of being closed with the obligation wiped out as part of the bankruptcy. Contacting the credit bureaus and insisting that those accounts be properly reported as "included in bankruptcy" will help lessen the damage by a surprising amount.
Second step is to rebuild your credit Most people know that getting a secured credit card (with a typical credit line of $200 to $500) will help raise your credit score and rebuild your credit provided that you don't charge more than about 30% of your credit limit, and you make the payments on time each month.
But getting a mortgage or a home equity loan (second mortgage) can also helps rebuild your credit. If you are a first-time buyer, there are government incentives to help you buy a home in just the right neighborhood. If you are already a homeowner, a home equity loan or line of credit can be used to renovate your kitchen or make other home improvements that will help improve your home. If you currently have an adjustable rate mortgage (ARM), you may consider mortgage refinancing by shifting to a fixed mortgage rate. Two reasons: you may want to avoid the next interest increase and possibly cash out on some of your home equity for home improvements or loan consolidation. Don’t forget that a mortgage refinance can also help you rebuild your credit and raise your credit scores, after filling for bankruptcies.
More Articles :
|
