While a bankruptcy will stay on your credit report for 10 years, it doesn’t mean you’re out of luck for that whole time when it comes to getting new credit and rebuilding some of your financial integrity.
You’ll likely get stacks of offers in the mail for secured credit cards as soon as your bankruptcy notice hits the legal ads. Secured cards can be a good first step, but not all cards are the same. Many of them are little more than attempts to make your financial life even more miserable.
With a secured card, you send the company money to keep on deposit, and it essentially loans you back your own funds (typically in the hundreds of dollars) in the form of a credit card. Yes, you are in effect paying someone else to spend your own money. But with the good ones you do get some benefits because you are rebuilding a solid credit history.
It’s the fees you need to watch for. There will be application fees, annual fees, upfront fees, participation fees — and before you know it, the few hundred dollars you put on deposit are gone.
Beware offers of unsecured cards for the same reason. The interest rate is likely to be very high. Additionally, if the card company doesn’t report your payments to the credit bureaus, it doesn’t do you any good. You need to build a track record of on-time payments.
Take a close look at your credit report from all three reporting bureaus. It’s possible that there are debts still listed (negative ones that show an overdue balance) that were canceled during bankruptcy. If there was a public notice in the legal ads, the credit bureaus will have seen it and should note it in your records. If they haven’t, insist that it be corrected.
When it comes to buying a house or car after bankruptcy, there is always someone who will give you a loan. The problem is the astronomical interest rate you’ll surely be offered. Wait it out. At some point (a year or two) you could qualify for a loan at closer to current interest rates. Use that time to build your credit and save money for a down payment.
If there are debts that were reaffirmed during bankruptcy (not discharged), use those as an example of how you’ll pay your debts in the future. Make all payments on time.
If you’ve been through bankruptcy, you essentially have a clean slate and can start new — but only if you don’t make any mistakes.
Uffington does not personally answer reader questions, but will incorporate them into his column whenever possible. Write to him in care of King Features Weekly Service, P.O. Box 536475, Orlando, FL 32853-6475, or send e-mail to columnreply@gmail.com.
You’ll likely get stacks of offers in the mail for secured credit cards as soon as your bankruptcy notice hits the legal ads. Secured cards can be a good first step, but not all cards are the same. Many of them are little more than attempts to make your financial life even more miserable.
With a secured card, you send the company money to keep on deposit, and it essentially loans you back your own funds (typically in the hundreds of dollars) in the form of a credit card. Yes, you are in effect paying someone else to spend your own money. But with the good ones you do get some benefits because you are rebuilding a solid credit history.
It’s the fees you need to watch for. There will be application fees, annual fees, upfront fees, participation fees — and before you know it, the few hundred dollars you put on deposit are gone.
Beware offers of unsecured cards for the same reason. The interest rate is likely to be very high. Additionally, if the card company doesn’t report your payments to the credit bureaus, it doesn’t do you any good. You need to build a track record of on-time payments.
Take a close look at your credit report from all three reporting bureaus. It’s possible that there are debts still listed (negative ones that show an overdue balance) that were canceled during bankruptcy. If there was a public notice in the legal ads, the credit bureaus will have seen it and should note it in your records. If they haven’t, insist that it be corrected.
When it comes to buying a house or car after bankruptcy, there is always someone who will give you a loan. The problem is the astronomical interest rate you’ll surely be offered. Wait it out. At some point (a year or two) you could qualify for a loan at closer to current interest rates. Use that time to build your credit and save money for a down payment.
If there are debts that were reaffirmed during bankruptcy (not discharged), use those as an example of how you’ll pay your debts in the future. Make all payments on time.
If you’ve been through bankruptcy, you essentially have a clean slate and can start new — but only if you don’t make any mistakes.
Uffington does not personally answer reader questions, but will incorporate them into his column whenever possible. Write to him in care of King Features Weekly Service, P.O. Box 536475, Orlando, FL 32853-6475, or send e-mail to columnreply@gmail.com.