Begin to interview lenders
You will want to call three lenders -- a car lender, a personal loan lender or a credit card lender. You will want to know the credit guidelines required to qualify for a loan or credit with them. You do not want to apply for credit yet, but you do want to know whether that particular lender is one that you can or cannot contact when the time comes.You should ask:
- Can I be approved for credit even though I filed bankruptcy?
- How long after I file can I be approved?
- What is your minimum credit score requirement?
- Do you review all three credit bureaus or just one particular bureau?
- Can I be approved for credit without a co-signer?
- Do you know of any other reputable creditors that work with people who just filed bankruptcy?
Apply for a secured credit card
This is one great way to re-establish a post-bankruptcy filing credit line. You will give the bank or credit union some money, usually $500. In exchange, you will get a credit card with a matching credit limit. Make sure the lender reports this new credit line to all three credit bureaus.You want all three bureaus to show post-bankruptcy payment history. You don't want to get a secured credit card, have it report to only one major agency and then be denied for credit because a particular lender does not look at that particular credit bureau report.
You need all three bureau's credit scores to improve after bankruptcy. Many lenders look at a "blended" score of all three bureaus. One bad credit score can bring down two better scores and disqualify you for a loan.
Also, find out when you will be able to increase the card's credit line and when you can receive an unsecured credit card. Try to choose a lender who will work with you to improve your credit.
Apply for an unsecured credit card
Some lenders will give you low, unsecured credit limits immediately after you have filed for bankruptcy. You can use these low-limit credit cards to re-establish credit. Just as with a secured credit card, make sure the lender reports that new credit line to all three credit bureaus and find out when you are able to increase the credit line.
Focus on banks and credit unions
Avoid finance companies and rent-to-own lenders. Instead, stick with banks and
credit unions. Your credit score and credit reputation will be stronger if you can re-establish with the larger institutions.
Remain positive through bankruptcy
Eleanor Roosevelt once said, "No one can make you feel inferior without your consent." You will be denied credit as you start your recovery from bankruptcy. But you must remain positive. Don't let a few rejections keep you from the ultimate goal of re-established credit.
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