ou're bankrupt. You're simply the minimum requirements
doing all the right things you must have in order to qualify
to improve your credit and for credit with that lender.
recover from your bankruptcy
The three common credit
(i.e., managing your money and guidelines for most lenders who
credit well, increasing your work with people after bankruptcy
credit scores, paying your bills are:
early or on time, and
(1) the amount of time you
re-establishing credit). have since your discharge
So when does the dark cloud (2) How you pay your bills after
that's been over you since you discharge
filed bankruptcy leave?
(3) Your FICO credit scores.
The answer is, "it
Time will heal.
depends."
The maximum amount of time the
With some lenders, as long as dark cloud of bankruptcy follows
your bankruptcy remains on your you is up to 10 years. Remember,
credit reports you will be denied this dark cloud is only for a
credit. The good news is, there season in your life, not forever.
are many "normal" lenders who are Bottom line: the more time you
willing to work with you after have after your bankruptcy is
bankruptcy. You just need to know discharged the more opportunities
where to find them.
you'll have to get credit.
It's NOT about working with
But lenders also need to know
lenders that are convenient for you've recovered. Late payments
you. It's about finding lenders after a discharged bankruptcy are
that will work with you without bad news. Lenders need to see an
taking advantage of your early or on-time payment history
situation. Each lender sets their to feel comfortable with you
own "credit guidelines." What are after bankruptcy.
credit guidelines? They are
There is no escaping a lender
who will judge us on our credit interest rate and terms you want.
scores. This is why it is so (This assumes you haven't had a
important to increase your scores foreclosure in the last 24 months
by deleting inaccurate, outdated, and you have a good payment
and unverifiable information from history since your
your credit reports. Your FICO discharge.)
scores are just too important to
To get better terms and a
ignore. You need to make it a lower interest rate, you need a
priority to keep your FICO credit higher middle credit score. A
scores as high as they can be. middle score of 600 will give you
High credit scores are the key to a lower interest rate and better
unlocking opportunities that have terms. (This assumes you haven't
been hidden from you.
had a foreclosure in the last 12
Let's look at how lenders use months.) A middle score of 620 or
credit scores so you can above opens up even better
understand what I mean.
options once you have two years
GETTING A MORTGAGE
after discharge.
Mortgage companies are pretty
PURCHASING A NEW
forgiving when it comes to CAR
lending money to someone who's
A FICO credit score over 700
filed bankruptcy. In fact, after on the credit reporting agency
bankruptcy, it's actually easier the manufacturer uses will open
to get a mortgage on a new home up the floodgates for you. A
than get approved for an score between 600 and 620 seems
unsecured credit card.
to be the bare minimum you need
As long as your middle FICO to qualify with most lenders for
credit score is 580 or above you a good interest rate. Slimy
will qualify for mortgage lenders (the kind that wear lots
financing with no money of gold chains, polyester suits,
down...just maybe not at the and broadcast a hairy chest to
the world) will help you if you
BANK LOANS
have a lower score.
Don't expect too much from
Remember, many car dealers use your banker until four years have
only one FICO score to make their passed and your FICO scores are
lending decisions. So, you're above 680. However, all bankers
always better off going to a are different. Find out what the
dealer who uses the credit possibilities are with your
reporting agency where you have banker. Do they have any
your highest FICO score.
authority to make credit
UNSECURED CREDIT decisions?
CARDS
After my bankruptcy I felt
Some lenders just don't want lucky to have a bank checking
to do business with a bankrupt account, savings account, debit
person.
card (now they're called
Interviewing lenders BEFORE Visa/MasterCard check cards), a
you apply for credit is so secured Visa credit card, and a
important. You need to determine few secured bank loan.
their credit guidelines before
A CREDIT LIMIT
you apply. (Read that sentence INCREASE
again!) Many unsecured credit
You need to be on a constant
card providers are 100% FICO hunt for higher credit limits.
credit score-based. That's how Even if you don't think you need
they can offer you an answer so them. It's good for your scores,
quickly if you apply by telephone especially when your spending
or over the internet.
patterns remain the same.
The only thing they look at to
You "earn" a higher credit
make their credit decision is one limit by paying your bills early
of your FICO scores. A FICO score or on time. Your next step is
over 700 seems to be what they're requesting a credit limit
looking for.
increase every six months. Credit
limit increases are usually based will certainly open enough doors
on how long you've been a at normal interest rates to
customer; your payment habits; accomplish your goals.
how long from the last time your
credit limit was increased; and
your FICO scores.
Again, anything over 700 opens type="text/javascript">
About the Author:
Stephen Snyder is the founder and president of the After Bankruptcy Foundation (http://www.AfterBankruptcy.org), a non-profit organization that provides free resources for helping people recover from bankruptcy. Stephen also writes a free weekly newsletter on bankruptcy recovery (http://www.LifeAfterBankruptcy.com).
