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5 Steps to Fix Bad Credit AfterBankruptcy

In the world of loans and mortgages, the worst entry on your credit report is no doubt bankruptcy.
Failure to manage your money in these extreme cases results in chapter 13 (some debts are eliminated and a payback plan set up) or chapter 7 (all debts eliminated except for a few essentials).
For borrowers whose adjustable rate or interest only mortgages are coming due, and won't be able to refinance at the original low teaser rate, foreclosures could be a real possibility leading to bankruptcy.
Despite the stigma, foreclosures, which stay on your credit report for 7-10 years, do NOT destroy your chances for getting a future mortgage or any loan for that matter.
You just have to have a plan to get your credit on track.
With a bit of discipline you can get your credit score back up to at least 600 in about 18 months.
You will however, need to find creditors who are willing to give you a second chance - and they're out there - you just need to do some leg work to find them.
Here are a few basic steps you can take to re-establish yourself in the eyes of most lenders.
1.
Make small purchases at stores that will give you a small line of credit at a reasonable rate - A good place to start would be a furniture, appliance or electronics type store.
3-4 entries like these within 6 months will start to re-establish yourself as creditworthy.
2.
Make a down payment of half- try to finance only half of what ever you purchase.
You want to do this to shorten the length of the loan - your goal should be to pay off the loan in 6 months.
3.
Open up secured credit card - these are typically very low limit cards - $250-$500 and require deposit.
Charge only very small amounts - amounts you know you can pay off at the end of the month - and make sure you PAY IT OFF.
Many of these cards will raise their limits once you prove responsible re-payment.
4.
Pay On time and in Full - No matter if the small amount of credit originates from a store or a new credit card pay off your bill each month or earlier.
5.
Make suregood credit habits are reported - If you take out the secured credit card make sure they report history to the major credit bureaus.
It doesn't do you any good to establish good credit habits if your improve credit behavior isnot reported.
If you follow these relatively simple guidelines you will on track for a 680 score in short time - 12-18 months.


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