A No Brainer Way To Rebuild Credit Aftr Bankruptcy
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How do you build credit after a bankruptcy? A bankruptcy filing will stay on your credit report for 7 to 10 years but it is important to remember that it becomes less important to your overall credit rating as time goes by. As a result, if you demonstrate good credit habits, and demonstrate them early after the filing, your chances of getting the credit you need at rates you can afford greatly increase.
Getting a positive item posted to your credit report is as easy as getting a personal loan from your bank. Sound like a crazy idea? Not really, all you have to do is explain to your loan officer what you are trying to do and how the bank will benefit by giving you a loan.
With the fresh start that bankruptcy provides you should be in a better cash position. Make it a priority to save $1000 as quickly as possible. Once you have accumulated the cash, make an appointment with a loan officer at the bank where you have your checking account. Explain that you are sincerely trying to improve your credit report and that you would like to take out a 6 month personal loan for $1000. Further explain that you will buy a $1000 Certificate of Deposit from the bank to serve as collateral for the loan.
What you have just proposed is a no risk $1000 personal loan that the bank will earn interest on. In addition, the bank sells a $1000 Certificate of Deposit. If banks were offered these kind of deals all the time, we wouldn't have to send tax dollars to bail them out.
Shortly after the loan has been granted it will appear on your credit report. Take the $1000 from the loan and set up a seperate savings account and use this to make the monthly loan payments. Providing you make your payments in full and on time, you will begin to improve your FICO score. What this strtegy is going to cost you is the interest rate on the loan but that will be partially offset by the interest you earn on the CD as well as a little from the savings account you use to pay back the loan.
If your cash flow allows, you may want to repeat this process once the loan is paid back. Also ask your loan officer about a secured credit card. If the bank offers that service, read the terms and conditions carefully to insure you understand the fees and limitations of the card. Make sure they report it to the credit reporting agencies as a standard credit card rather than a secured card.
A bankruptcy is a big blot on a credit record but it can be overcome. FICO scores are predictive. It looks at current behavior as well as the past record and projects the risk in the future. If you demonstrate that you are behaving responsibly, your score will improve.
Article Source: Articlelogy.com
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