Re-establishing credit after bankruptcy
Question: About 6 months ago I was discharged from a bankruptcy and haven’t done anything yet to re-establish it. I’ve also moved (renting as usual) and changed jobs (different industry) in the last month, so I have no job or residence stability. My bank won’t offer me any sort of credit for another 5 and a half years when the bankruptcy falls off my credit report.
I realize this is the penalty I pay for being relieved of my debts and wasn’t expecting it to be a walk in the park. I’ve learned from my mistakes and have be pretty good about paying my current bills on time to avoid any negative reports on my credit report. But, I don’t make much money and have very little left over after everything is paid. I’m looking for a higher paying job, a extra part-time job, or starting a part time business on the side to make more money.
Short of high-risk (and high-interest) car loans and mortgages, which I may be able to qualify for in the near future is there anything else I can do to re-establish credit? I’m even afraid to obtain a credit report as I’ve heard that will lower my score a few points – and I need all the points I can get right now!
I’ve heard about secured credit cards to repair credit and have seen some mentioned on your website. Money is a bit tight right now, but I hope to be able to save $300 or $500 to start one soon. I’ve heard conflicting opinions on whether or not to get a higher limit – theory being I “could” max out the card at any time and give me a bad debt-to-income ratio. Any ideas on what I can do to re-establish credit soon would be greatly appreciated.
Answer: The most important method for re-establishing credit after bankruptcy is to save money. That money can then be used as a down payment for a car, house, or other purchase.
A secured credit card is also generally a good idea. We suggest you use it, but pay it in full every month. It shows that you are handling credit wisely, but still have no debt.
As for your credit report, it is true that if you apply for credit at a lot of places in a short period of time, you will lower your credit score. However, requesting a copy of your own credit report does not impact on your credit score.