What Is the Best Way to Repair Credit After Bankruptcy?

It’s no secret that filing bankruptcy can take a toll on your credit score. After all, the fact that you have filed means that you were, at one time, unable to pay back debts that you originally agreed to take on. That doesn’t make you a bad person. Life happens and all financial institutions are aware that they are taking a risk any time they agree to extend credit to anyone. However, they are going to take your entire credit history into account when they offer you credit in the future, including your bankruptcy. This can be both good and bad for your credit. Click here for more bankruptcy information (http://www.zerodownbankruptcy.com/).

Limits After Bankruptcy

Getting credit after you file bankruptcy isn’t as hard as you might imagine. Creditors know two things: They know that you have filed bankruptcy, so you no longer have debt preventing you from making payments to them, and they know that you can’t file bankruptcy again anytime soon. Whether you pay them back in the years before you can file again or they end up claiming a loss on their taxes, they have a good chance at recovering whatever they loan you either way. Because you are starting with a clean slate, repairing your credit can be easier than you think. For more information about bankruptcy click here (http://www.zerodownbankruptcy.com/chapter-7/).

Be Picky About Creditors

After you file bankruptcy, credit offers may start coming in rather quickly. In fact, you may get more credit offers after bankruptcy is discharged than you ever got before you filed. That can seem like a relief during the period of adjustment when you’re not really sure how creditors are going to view you and your bankruptcy. At the same time, it can also be a trap.

Shop for the Best Credit Offers

Although numerous creditors are going to offer you credit, it may not be on terms that you can manage or would even want to manage. Interest rates are high for anyone who has filed bankruptcy. You don’t want the whole process of drowning in debt to start all over again, so it’s best to only use credit when you can afford it. In other words, you should pass on the new pair of shoes with the 27 percent interest rate and instead shop around for a gas card with a low interest rate.

Start with Small Accounts You Can Manage

Most people end up in bankruptcy court because they extended their credit line as far as they could and then ended up in a situation where they were unable to meet their obligations. Make goals for yourself concerning your finances and then stick with those goals. Start with small accounts that you can easily afford. Use those accounts for purchases you plan to make anyway, such as gas and groceries. These are considered necessities, and if you then put your cash back for the monthly credit payment, you can increase your credit score in no time.

Start Over and Build Better Credit

Keep in mind that as you are rebuilding your credit, creditors like to see that you have open lines of different types of credit. You should make sure you use your accounts, but avoid maxing out your credit lines. Above all, make sure you consistently pay your balances on time and stay within the credit limits you are given. It won’t take long before you’re on the road to better credit after your bankruptcy.