Recovering From Bankruptcy
Bankruptcy emerged as an alternative to more draconian measures that left people as indentured servants or worse over a run of bad luck or even a period of poor decision-making. For most people, bankruptcy offers a chance to get a fresh start, hopefully with better luck and smarter choices. Still, bankruptcy isn’t a freebie. Bankruptcy is a public record and remains on your credit report for up to 10 years. Bankruptcy may hamper your ability to access good opportunities in lending, business financing, even renting a house, so it is important to start working to recover from bankruptcy right away.
In order to recover from bankruptcy, you will need to show that you can be responsible with credit. You show that you are responsible with credit by using credit well, but to get credit, you need to show that you are responsible with credit—so it’s a catch-22.
Fortunately, there are two simple ways to break out of this loop. First, you may find your mailbox full of invitations to buy a used car with a loan. The interest rate will not be low, and you won’t be able to buy the newest or most expensive car, but these dealerships are happy to give you a car loan for two reasons. One, if you don’t pay the loan, they can repossess the car and recover most of their expense. Two, car dealers only make money when they sell cars. Waiting for you to be “ready” financially isn’t profitable for them.
If you don’t need or want a car loan, the second simple solution is a secured credit card. A secured credit card is where you deposit an amount, such as $500, with a bank or lender. In exchange, they give you a regular credit card with a $500 limit. You make regular charges and regular payments. Each on-time payment boosts your credit score. If you fail to pay, they just keep your $500.
Once you have credit again, recovering is as simple as continuing to make on-time payments until your bankruptcy and previous missed payments are old news. If you’re recovering from bankruptcy and need help repairing your credit score, reach out to Key Credit Repair today and schedule a free consultation.