There was a time when bankruptcy was probably the biggest stigma that could be attached to anyone regardless of sex, age, or race. Thankfully those days are long gone. Today, bankruptcies are fast, efficient and frequent court procedures designed not as a punishment for the creditor, but as a means of drawing a line under un-payable debts and allowing everyone to move on. While most people would not exactly like to be made bankrupt, in most cases where it becomes necessary, it is seen as a welcome release rather than a humiliating penalty.
In this article we're going to cover what I believe to be the best strategy for rebuilding credit after bankruptcy. If you stick to some basic rules and follow some very basic steps you may be surprised to find that you can have a very healthy credit score within a relatively short amount of time after your bankruptcy is discharged and begin to live a good life!
This "credit after bankruptcy" strategy works because of a special aspect of the credit scoring system known as "scorecards". In credit scoring, a "score card" categorizes and scores consumers based on their credit performance compared to others in their same category. It's kind of like the credit world's equivalent of "grading on a curve", but this "grading curve" can hurt you just as much as it can help you.
Both FICO and the newer Vantage score use scorecards, so the general discussion here should apply to both. A scorecard might, for example, look at patterns for consumers who have filed bankruptcy. Statistics might show that if a consumer has late payments within a few months of bankruptcy, they are highly likely to have even worse credit problems and possibly repeat the cycle in the future.
Statistics might also show that consumers who keep their credit clean after bankruptcy for at least a year or two are much less likely to default on loans. As a result, if you establish and maintain positive trade lines (at least one) you are demonstrating good credit habits and will be rewarded. On the other hand, if you establish these accounts, but don’t maintain a positive rating, you will be evaluated harshly resulting in an even lower score and harder time to recover.
Remember, the key after bankruptcy is to get back in the game and prove that you are credit worthy. There was a time when bankruptcy was probably the biggest stigma that could be attached to anyone. Thankfully those days are long gone if you allow it to be. Today, bankruptcies are fast, efficient and are designed not as a punishment, but as a means of drawing a line under un-payable debts and allowing everyone to move on. While most people would not exactly like to be made bankrupt, in most cases where it becomes necessary, it is seen as a welcome release rather than a humiliating penalty.
The Future After Bankruptcy
After your bankruptcy has been finalized and you have moved on you will be able to start rebuilding your financial, and probably personal, life again. Bad credit ratings will ensue, but rebuilding your credit is possible. Just like my new grand-daughter will experience, baby steps are all that is required. Step by step, more credit options will become available and soon your credit rating will improve if you keep focused and don’t fall into any quick fix traps.
Remember, bankruptcy isn’t a dirty word, so don’t be ashamed and don’t do it alone! If you or someone you know has considered or filed bankruptcy, get your eBook of Credit & Bankruptcy, Rebuilding After The Financial Storm right now at our special launch price of only $2.99!
She is an author of the bestseller “The Queens Legacy”, "Credit & Bankruptcy, Rebuilding After The Financial Storm”, “What You Need to Know about Credit & Cosigning”, "Your First Step to Credit Restoration” and “He Jacked up My Credit”. She is also a contributing author for several magazines as well as other newsletters. She is also the co-host of her weekly radio broadcast, Lunch & Learn with Chris & Barrett. Her latest program, The 21 Day Credit Challenge, is moving her clients closer to an 850 credit score in as little as 21 days.
Chris can be reached at 877-896-2831 or visit www.chrisbridgesspeaks.com.