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The biggest doubt with people is, once I file for Bankruptcy, what after that? Will they ever have a good credit score again? Well, let me tell you, Yes. Though not immediately, with time, you can build your credit score again.
1) What is the importance of Credit?
Clients who go through Chapter 7 Bankruptcy once, don’t want to look at finance agreements or credit cards again. However, having good credit is always important. It is a skill one must keep working on. 2 years after completion of your Chapter 7 case, you will be eligible for an FHA-backed mortgage. Having good credit is important, as it is the differentiating factor between a mortgage with a very high-interest rate, ie. Less cash each month, and a prime interest rate. In getting a lease for an apartment also your credit score comes in handy. Be it an apartment or a car, they are all necessities in life, and no one wants to pay extra for them, just because they don’t have a good credit score.
2) Afraid of getting new credit? Why?
Only with credit can you build credit. Once you get a discharge of your Chapter 7 debts, the first thing you can do is apply for a secured credit card in a local community bank. Though it will have a low limit, still, it is a good way to start. Don’t charge your card with more than 30% of its limit, and in the first few months, pay them off in full. Don’t be late in the same. You can also set up automatic payments so that you don’t falter on it. Do whatever you can, but don’t miss the date.
There are a lot of vendors ready to offer to finance if you are looking for a vehicle. They will charge you a higher interest rate. However, you need to make sure you can pay off the monthly car payments as well as the monthly cost of insurance. Recheck your credit report. Correct it wherever needed. Go to annualcreditreport.com and you will get a free report. Read it carefully. Check it thoroughly. Are the debts that were included in your bankruptcy showing ‘discharged’? Check for errors. If any, you can write a letter to the credit bureau sending a letter certified mail. Mention the error and its corrections that need to be done. They will get back to you within 30 days.
Remember, even after Bankruptcy, maintaining a credit score is important. In our lives, we use up a lot of credit. Not always do we have cash available for things we wish to purchase. A good credit score helps you not look back on your dreams and wishes.