How Long Will Bankruptcy Ruin My Credit?
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Now, the first year after bankruptcy is going to be the toughest. Be sure to talk with your bankruptcy attorney before discharge of your debts to get some advice and begin planning your course of action over the next few years.
The first year is critical to your credit score. You won't see a lot of immediate improvement, but this is the time frame that you need to be the most diligent in paying your bills on time. Get into the habit of it. If you can, obtain a small loan or a credit card and make small purchases, always being sure to pay it off on time. View your bankruptcy experience as an opportunity to learn fiscal responsibility, not fall back into old habits of irresponsible spending.
If you can't qualify for a normal credit card, you can get a secured credit card. A secured credit card works like this. I can give the issuer of the card a certain amount of money, lets say 500 dollars. The issuer will keep this as collateral to ensure I make the payments, and the card has a spending limit of 500 dollars. The issuer will report the spendings and activity so that my credit will improve. I may discontinue the card at any time as long as I have paid it off. This is a good way to begin rebuilding credit.
How Long Will Bankruptcy Ruin My Credit?
Another very important thing, though sometimes more difficult and not as easy to control, is your employment status. Creditors like to see a steady employment and how long you've been with your employer, shows commitment.
In the second year most people are able to get normal credit cards and loans, albeit at a slightly higher interest rate, just be sure to make the payments on time!
After year three, things will really start improving. Most people are even able to get home loans at normal rates!
How Long Will Bankruptcy Ruin My Credit?
Lets summarize:
- Make payments on time!
- Maintain steady employment
- Get credit cards and/or small loans and make small purchases and make payments on time
So, bankruptcy really is not the end of the world, nor your credit score. Though it will remain on your file for seven to ten years, the negative effects immediately diminish and by year three, are almost gone. Leaving you with a fresh new start....
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