Note: This article is a continuation from Part One of the Simple Guide to Rebuilding Your Credit after Bankruptcy.
Six Months after Discharge
- Apply for an unsecured credit card. An internet search will help in your research to find unsecured cards for individuals with a recent bankruptcy discharge. If you are declined, call the company immediately and request a reconsideration. Charge on this card monthly, but no more than $100 on this card, ever. Pay this card off completely every month as soon as you get the bill.
- Apply for a gas or retail store card. Gas and retail cards typically don’t require applicants to have good credit and, in fact, cater to folks with blemished credit.
One Year after Discharge
- When your secured loan at the credit union ends, request an unsecured loan between $1,000 and $2,000. You should also discuss options for an unsecured credit card through the credit union.
- Obtain new credit bureau reports from http://www.annualcreditreport.com and review these reports for accuracy. It is surprising how often discharged debts can “magically” reappear on an individual’s credit report.
- A new vehicle purchase should be put off until at least one year after your bankruptcy discharge. A credit score can recover quickly after bankruptcy, and many captive finance companies (e.g. Ford Motor Credit) require both a reasonable credit score and recent history of on-time payments. A new vehicle loan is a major credit purchase, and on-time payments will propel your credit score upwards and demonstrate responsible management of significant credit.
Two Years after Discharge
- Obtain new credit bureau reports from http://www.annualcreditreport.com. Review these reports for accuracy. Many bankruptcy debtors are able to obtain an above-average or even excellent credit score within two years after bankruptcy.
- A home purchase is available to many debtors two years after a bankruptcy discharge. Most government-backed loans require a two year “seasoning” after a bankruptcy discharge. Speaking with your credit union about their loan products is a good first step in the home purchase process.
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