Rebuilding Credit After Bankruptcy

Steps for rebuilding credit after bankruptcy legally

The first pressing issue after discharge is financial security. A modest cushion built from savings provides much need comfort. Just as importantly, rebuilding credit after bankruptcy begins the day following discharge. Late payments should be a past memory. Each day the discharge ages increases credit scores slightly. As weeks grow into months, debtors may also avail themselves of a few time tested, effective methods to quickly rebuild credit.

How to rebuild credit fast

A logical plan for rebuilding credit must be judiciously followed to be effective. High risk credit cards and secured credit cards do little to enhance FICO scores. In truth, these costly alternatives are red flags which are widely recognized and discounted by prudent lenders. Monthly installment loans are a far better choice so long as lenders report timely payments. The amount of an installment loan is relatively insignificant in the months following a discharge. Start small, pay early, and build larger loan balances consistently. For example, starting with a $300 note, paid in 6 months, then $600, $1200 and $2000 over a two year period. In as little as 24 months the aging process diminishes past history, and current credit history creates a better credit score than reported in the months before filing. Many debtors report above average credit scores in as few as four years, despite a prior discharge.

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