Rebuilding Credit After Bankruptcy
Often times, our clients want to how lending professionals view the topic of rebuilding one’s credit after filing for bankruptcy. We’ve spoken with people in the lending industries over our career. The general consensus amongst our colleagues showed that they wouldn’t encounter this often and could only recall a handful of credit reports where people had filed bankruptcy in the past. Of those pulled, however, many of them had a credit score back in the 700’s.
The reason this is possible for some people usually reflects that they have learned from their mistakes and have established a proven track record of debt management after the bankruptcy. Even after bankruptcy, people probably have access to some ability to rebuild their credit. Maybe there is a local business that helps people rebuild credit by offering favorable terms on small purchases. There’s usually an option for a secured credit card or other priority interest that lowers the risks of default and might be available. The key is re-establishing credit and demonstrating good financial habits post-bankruptcy. Some people have said that once they know a bankruptcy has been sought, creditors might still be willing to extent debt knowing you’ll be unable to file for bankruptcy for many years thereafter. This isn’t true for everybody but it is possible to obtain debt after a bankruptcy so you can rebuild your credit.
Implicit in someone who has rebuilt credit after bankruptcy is an assumption that they’ve changed the way they manage debts and has demonstrated those habits with a range of debts post-bankruptcy that have been satisfied. All in all, it is certainly possible to rebuild your credit after bankruptcy. The major factor in our experience, however, is that you must change your lifestyle and your choices. We’ll cover some of the ways you can rebuild your credit and also the mindset required for success. Paramount to success is not doing what put you in debt the first time and exhibiting strong financial responsibility.