Rebuilding Your Credit After Bankruptcy
When a person declares bankruptcy the Office of the Superintendent
of Bankruptcy notifies the credit bureau. This information stays on your credit
bureau report for 6 - 7 years. You can start to re-establish your credit by doing
the following:
- Talk to your banker and say you want to re-establish your credit rating;
- Open a savings account;
- Be a regular and persistent saver. Use the common techniques I am sure you have
heard of:
- Pay yourself first;
- Take your next raise and save it;
- Save 5 % of your pay;
- Have your savings come right off your pay and into a separate savings account;
- Take out a small loan using the savings account as collateral, and then pay it
back;
- Apply for a credit card with a low limit and secure
the limit by using your savings account as collateral;
- Pay your credit card balances on time.
GETTING A CREDIT CARD FOLLOWING A BANKRUPTCY CLAIM
When a person goes into bankruptcy he has to hand in all his credit cards to the
Trustee.
After that person has been discharged from bankruptcy, he or she is often a good
credit risk, since that person has no debt. Regardless, a discharged bankrupt often
has a difficult time getting a new credit card.
An option is to request a "secured card" from your financial institution. A "secured
card" is a card backed-up or secured by funds you have deposited with the bank or
credit union. The card looks like a credit card, and acts like a credit card but
will have a limit depending on the amount of money that secures the card.
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