One
of the most frequently asked questions about getting mortgage
financing is what to do after filing bankruptcy. You can
purchase a home after filing bankruptcy, but you will need to
pay higher interest rates. The faster you reestablish credit
and the way you handle your credit after filing makes a huge
difference in your ability to get a new home loan.
A Quick Bandage for Bankruptcy
by
Jeanette Joy Fisher
Millions
of Americans are forced to declare bankruptcy every year, but
even if you're one of those people, you can begin immediately
to rebuild your damaged credit by taking a few relatively easy
steps. Here are some ideas to help you get back on the right
credit track:
First,
pay all of your bills on time from now on. Make a pact with
yourself never to be late with a payment again. It may require
some stricter discipline than you have been used to, but it
will go a long way toward reestablishing your credit
worrthiness in the eyes of potential creditors like banks and
credit card companies.
Second,
although it will be tempting to do because you'll be eager to
get another credit card, resist the temptation to apply for a
lot of new credit. Making a bunch of credit applications all
at once actually can lower your credit score and make it
harder to secure new lines of credit.
Third,
whether you love them or hate them, credit cards are a
necessity in today’s world, even if you don't actually plan to
use them. There are many things you simply can't do if you
don't have a Visa card or other major credit card, such as
rent a car, since rental companies will require you to show
them a credit card even if you're paying cash. Since that's
the reality of the modern world, look into getting a secured
credit card.
Secured
credit cards require you to put a certain amount of money into
an account (typically between $300 and $500), which is then
considered as collateral for your purchases using the card.
You're then allowed to charge any amount of money on your
card, up to the amount you have in your account, and repay it
in monthly installments.
The
nice thing about secured cards is that they look no different
from any other card, so you can use them as ID or to make
purchases (as long as you don't go over your limit) and they
allow you to begin reestablishing your credit by showing that
you can make payments in a timely fashion, regardless of your
previous history. As you begin to prove your credit
worthiness, you may be rewarded with an increase in the amount
you can charge that’s above what you have in your account.
A
good place to begin your search for your first secured credit
card is through your local credit union. They're often more
flexible than banks, and a number of them will actually waive
the annual fee that most secured cards charge. If you aren't a
member of a credit union, shop hard for your secured card,
because there are wide variations in the terms, fees, interest
rates, and requirements. Some companies will even charge you a
fee just to apply for a card!
You
can begin rebuilding your credit almost immediately following
a bankruptcy, but it will take time and a commitment to handle
your finances more carefully in the future. It just takes
self-control and discipline.
Read
more about mortgage credit qualifications in the free ebook
Credit Tips for Mortgage Financing and
Wealth-Building Tools. Free
Credit Tips ebook
