Bankruptcy - Getting credit again

Personal bankruptcy is often agonizing; it is the end result of several years of being unable to pay debts adequately and it's usually the last resort of those who are in trouble financially. In a bankruptcy filing, the courts will generally absolve all debts and obligations, aside from student loans, child support, spousal support and tax liens. After filing for bankruptcy, you are free of your burden of debt, but you are also, unfortunately, free of available credit.

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A lack of credit after bankruptcy can trigger a host of problems. Property managers want to rent to consumers who am able to pay their bills, so you can expect a credit check if you would like to rent an apartment. If you need a phone, the phone company will want to examine your credit history. If you seek a job, your employer will evaluate your credit report.

If you no longer have acceptable credit, you have to create credit again. Constructing a new credit record will not be simple or speedy, but it can be done and it is not overly hard.

It is possible to speed up the process a bit if you know someone with good credit who will be willing to set you up as a qualified user on one of his credit card accounts. As long as the cardholder pays their bills regularly and when they are due, you will derive benefits. Just having your name on the credit card account will help you rebuild your FICO score. You don't have to use the account and you don't have to pay the monthly payments. The disadvantage, of course, is that you could be harmed if your friend or relative who owns the account does not pay it. All they have to do is put you on the credit card account.

A lot of people who leave personal bankruptcy are surprised to see that the credit card companies offer credit accounts to bankrupt people. Advertising charge cards to consumers who are just out of bankruptcy court may seem strange, but the credit card companies' reasons are sound ones. Once you leave debt relief court, you cannot have your financial obligations forgiven again for 8 years, so anything you charge in the meantime must be repaid. The interest rate advertised will almost certainly be in the vicinity of 30% per year, your limit will be quite low, and the annual charge will probably be quite high. Charge card offers to the freshly bankrupt are not a good deal, but if you sign up, and make small and monthly purchases and pay your bills each month and on time, you can steadily rebuild that damaged FICO score.

Get a copy of your credit record and be certain that your debts are noted as discharged. Cleaning up your credit record may be a tedious, time consuming process, but it is quite important to make sure that your credit report is correct. If your report suggests your old debts as current, you have to cleanup your credit report by contacting the three bureaus and informing them that your debts have been discharged.

The time spent repairing a credit record is well worth it, as you will enjoy rewards for decades to come. Repairing a credit history is a difficult task and it may seem daunting to anyone who is leaving bankruptcy court.