First Person: Re-Establishing Credit After Bankruptcy

Yahoo Contributor Network

When I filed for bankruptcy, I knew that the biggest challenge facing me after my bankruptcy would be re-establishing my credit. I lost all of my credit cards, even the ones that were not included in the bankruptcy. This meant that I needed to find new companies that were willing to offer me credit.

Credit Cards

Several months after my bankruptcy was discharged, I applied for a secured credit card and was able to get one. Getting a secured credit card meant that I had to pay them a deposit of $50 for a $200 line of credit. I also have a yearly fee of $29 for this card. Before my bankruptcy, I had several credit cards with a combined credit limit of over $25,000 and no annual fees on any of them. It will be a long time before I have that kind of credit limit again and I may never get to that point. I was advised not to ever ask for credit again from any bank that I included in my bankruptcy because they would likely never extend credit to me again. This limits the number of companies that I can ask for credit from.

I have made sure that I always pay this credit card on time and in full every month. I also make sure that I charge things on it on a fairly frequent basis to help me re-establish my credit. About a year after I got the card, they extended my credit limit to $300 without asking for an additional deposit. While this is good news, it shows how slowly my credit is improving.

Auto Loans

After my bankruptcy, I got inundated with offers from various car dealerships to extend credit to me to buy a car. While this would have been a great way to help me re-establish my credit, I am self-employed so I have no paystubs to show a car dealership to prove my income. It is often difficult to get loans when you are self-employed but it makes it even more difficult when you are self-employed and have declared bankruptcy. Some of the car dealerships also wanted a long-term steady employment history in order to consider me for a loan.

Paying Everything on Time

I now make sure that I pay every bill that I get on time and in full. This helps me to establish a good payment history on every financial transaction I have. I had a student loan that was not discharged in my bankruptcy and I made sure that I paid that bill every month before it was due.

While it has not been easy to re-establish my credit after declaring bankruptcy, I have made slow and steady progress towards improving my credit.

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