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Reestablishing Creditworthiness after Bankruptcy

By Karen Anderson
Published: Sunday, November 29th, 2009

More and more individuals find themselves falling under the strain of their financial difficulties. Especially with the global financial crisis, many have declared bankruptcy. Credit report tips constantly warn individuals against this action for it could severely damage their credit standing. Thus, for individuals who have declared bankruptcy, it seems as though the end of the world has come.

However, they need not despair for there is still some hope left. Regaining financial security is surely a long and winding road, but it is still a possibility. Through proper planning, prudent decisions and patience, they could improve their financial standing.

The question therefore that has to be answered is how to reestablish creditworthiness. Surely enough, moping around depressed will do them no good. Rather, they should be keen to see the possible alternatives available. The earlier they take action to resolve their financial situation, the earlier they are able to recover.

One of the key credit report tips is to know the facts. A declaration of bankruptcy is reflected in the credit report for 10 years. Reestablishing a good credit standing requires about 18 months of timely bill payments. It is surely a difficult task, but not an impossible one.

What then are the steps that would set them on the right path? Obtaining employment should be the first step. They should not worry if it is part-time job. Establishing a steady work record is one among the most important credit report tips. Obtaining credit reports from the three credit bureaus is the next step. Accordingly, they should check that the information contained therein is correct.

Of course, settling credit card debts should also be a priority. As soon as they are paid, all extra credit card accounts should be closed. One or two credits cards should be sufficient. This is a wise move in that it gives potential creditors the impression that individuals will be more prudent in using credit.

Another good advice is to open a savings account and to make regular deposits to it. Individuals should also avoid the same mistake they made previously. Thus, paying bills on time is of prime importance for it safeguards against the accumulation of debt and bad credit.

Getting a loan from a bank or credit union is another essential advice among the credit report tips. Accordingly, individuals should use this loan wisely. This entails prioritizing necessities such as food and rent. When deciding what debts to pay first, individuals should choose the one with the highest interest rates.

An equally important option that could be tapped is consulting with lenders regarding possible alternatives of settling that debt. This may seem counter-intuitive but many lenders are in fact willing to cooperate with their debtors in coming up with alternative payment strategies.

These credit report tips are but examples of suggestions that individuals can do to reestablish credit. They should remember that bankruptcy does not necessarily signal the end. Restoring one’s financial situation is possible through commitment, patience and prudent credit behavior.

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