Friday, September 25th, 2009

How do you build your credit after bankruptcy?

credit bankruptcy
sunrise2482 asked:


I am filling for bankruptcy and I really need to know how do I build my credit back up, without making the same mistakes!!

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This entry was posted on Friday, September 25th, 2009 at 12:00 am and is filed under Credit Score Information. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

9 Responses to “How do you build your credit after bankruptcy?”

Karleos Says:
September 26th, 2009 at 9:36 am

Unfortunately, the only way to do it is by old fashioned incoming and outgoing calculations. You need to account for every penny coming in and decide what you NEED to go out….if you want to build your credit, you are going to have to give up the things you expect to buy, want to buy, don’t need to buy…and live off the basics…

This country loves people to spend more money than we actually have, the government is growing rich off our debt..!!

Don’t let them do it to you again, be strong, live sparse for a while and you will see the gains eventually…..good luck..

K

ThatGuy! Says:
September 29th, 2009 at 12:53 am

Well, it takes credit to build credit.
After a bankruptcy, it may take years to get back on top.

But know matter how long, it is best to get started right away.

I started building my credit with a credit card(I included a link).

You can get credit cards with bad credit, both secured and unsecured. This will be a start. Just keep your limit low, use it to pay for a few things you need a month, and always pay it off!

I recommened using it for just one neccesity, perhaps gasoline, or food. Not for impulsive purchases!
Don’t get caught up in the same cycle as before.

You must learn from your mistakes! Good luck!

popp Says:
September 30th, 2009 at 9:58 pm

Don’t get credit cards to SPEND on, you could get them but just DON’T USE . It is easy to build up a credit rating by taking out a credit card and not using it. If you were to get one, cut it up and burn it or throw it out - either way GET RID OF IT. This way there is no chance you will build up debt by relying on the credit card to bail you out, you can use it to your advantage, not disadvantage.

If you don’t spend on it, you don’t have to pay back so you will always be ahead and never behind. By showing that you can manage your finances without falling behind in payments, this will build you up again.

Use interest free payment schemes to your advantage. You don’t even have to purchase something of a high value. When you need to replace your vaccum or you need something essential like a fridge or freezer, go to currys and pick out something that u can take away intrest free.
Usually at store’s like curry’s & DFS, they give you 6-9 months to pay back without incuring interest charges. Pay back the minimum each month and the month before the interest is added onto repayments wipe the ‘loan’ and pay it all off.
To make sure you can make the final payment before interest is added to repayments, save money each month to add to the final payment and just stick with paying the minimum each month.

Even by paying insurance premiums monthly instead of annually can help boost your credit rating.

Think simple and managable and it is realistic to do. Yes it will take time but you will get there.

morris_brad Says:
October 4th, 2009 at 1:16 am

OK, if you are “…filling for bankruptcy…” (present tense), then I am assuming you have (a) sought help from an accountant, insoovency practioner, CCCS (they are a good resource), (b) have approached your creditors for an informal arrangement (c) consider that an IVA is not appropriate, (d) have discussed this with your significant other, and (e) are of an age where you can recover.

…that said…

Understand bankruptcy is a MAJOR step and it will have LONG term inplications on your credit record.

* The bankruptcy order will stay in place for a minimum of 2 yrs, but will stay on your credit file (Expieran, Equifax, Call Credit) for SIX years.
* To ‘rebuild’ your credit, this will need to be done right after the order is lifted, in showing a perfect payment history (more on that below)

On the good side, the UK govt has provided for people to get back on their feet if they have gone in over their heads in debt (Enterprise Act 2000 and as amended).
Bankruptcy will be 2yrs of NO CREDIT BEING GIVEN TO YOU (thinking being - you are in this position because you cannot repay your borrowings), and then a further 4 years of going through enormous hassle to get a simple 500-quid store card.

This is on top of the fact you may lose your house, other assets, it becomes a public record, your employer will need to be notifited etc etc…. all those social implications.

For the payment history part, this is a BIG factor that consumer credit companies use to grant credit. The collect monthly payment data from all your creditors, that being from the mortgagers, personal loan companies, banks, credit cards, utlity bills, phone companies etc and collate them onto your file. Usually they will show 12, or 24 months payment history like `00000100000010101001234D`. Here, the `0` says `0months in arrears`, the `1` is one month arrears etc… the `D` is the default, or when they sent the baliffs around )-: This string of numbers is pulled apart by the credit scorecards used to assess your credit. So ideally, you want to show them `0000000000000……` etc. But if the see BANKRUPTCY - pretty sure its a decline, even if it is past.

An IVA is a softer option, as it reduces your monthly outgoings as creditors write off up to 80% of your debt to them. This gives you some breathing space, but in terms of credit records, the IVA is for 5 years and they stay on your credit files with the bureaux for another 2yrs after that (7yrs).

Think hard before you throw yourself on your sword - it will help.
Get some advise first.

All the best.
Brad M

Libby one and only. Says:
October 4th, 2009 at 2:19 pm

Well for three years you won’t be able to get credit anyway. Open a natwest Step Account because with that you cannot have an overdraft or cheque book- its the only you can get a bank account. You re-build your credit rating by never missing a payment for anything or making late payments. Having credit cards does actually improve your credit rating if you use them properly. Once you have gone bankrupt you need to seek advice on keeping a good budget. Only spending what you have and living within your means is the only way to get there.
Visit.- never remember whether its uk or com. Get some great ideas from there.
We have both been bankrupt in the past- now both have excellent credit ratings and credit cards, bank accounts and loans- we are self disciplined and have what we can afford and pay regularly. Going bankrupt is not the big deal some people make and recovery is simple.

Studly Says:
October 5th, 2009 at 3:48 pm

Go to this site:

This site is set up specifically for people trying to recover from bankruptcies. Some of the info is pay-for but there is a ton of very good info. Go to their newsletter area and you will find some recent newsletters that go into detail of how to rebuild your credit. Too many points to cover in this space, so go take a look.

If you have not yet filed for bankruptcy it’s VERY important to set up some sort of beachhead so you have some footing to get started.

susan c Says:
October 6th, 2009 at 11:30 am

As you are aware, you will not be granted credit for a number of years after you file for bankruptcy. In order to re-build your credit history and restore financial health, I would suggest you set yourself a forced savings plan which automatically debits your account and transfers the funds to an investment or RSP. Building your net worth will show future lenders that you have your finances back under control and will not likely repeat your past mistakes. Do not cash the savings to buy “stuff”. Save up for purchases with a separate savings account.
To begin the process you will have to identify where you are spending your money now. Listing in detail, all your expenses from your rent and utilities, right down to that latte you may buy every morning. ADD IT UP. How close is the total to your take home pay? If you are short then you have to change your spending habits. For instance that $5 latte bought 5 days a week costs $1,300 a year! Other things like fast food and eating out can be reduced and save money. I’m sure you are aware of where you went wrong before and you have the right attitude to help you get re-established. Good Luck

Kat Says:
October 8th, 2009 at 9:30 am

Hi. The absolute first thing you need to do is request a copy of your credit report from all three credit bureaus and make sure that everything included in your bankruptcy that is on your credit report states either discharged in bankruptcy or has a zero balance. There are so many errors on credit reports after bankruptcy. If there are things that aren’t shown as “included in bankruptcy”, just dispute it with the credit bureau and they will correct it.

As far as obtaining credit or purchasing a vehicle, there should be several dealerships in your area that will finance you provided that your case has been discharged. Please be advised that your interest rate may be a little high…but you can get financing.

The most important thing to do is to review your credit report. There is no need for you to contact a credit repair company because they will charge you for something you can do for free.

gonzo Says:
October 10th, 2009 at 4:06 pm

Yes Get your credit report. If you are in Canada contact TransUnion, Equifax, and Northern Credit Bureaus. You can get your credit report for free if you call them.

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