SEP 23, 2010
If you are one of the thousands of Americans who have recently sought bankruptcy protection, you may be concerned about your ability to rebuild your credit. Although the bankruptcy will remain on your credit report for up to 10 years, you can start the repair process by practicing smart financial and money management habits.
The most simple way to boost your credit standing is to pay your bills on time. It seems simple, but when you get caught up in your day-to-day tasks, forgetting to put a check in the mail can be easy to do. Talk to your bank about setting up automatic payments to avoid this in the future. Some lenders, including most student loan and mortgage companies, will even cut you a break on the interest if you let them deduct payments automatically each month.
Obtain a secured credit card that reports to credit bureaus. Payment history accounts for 35 percent of your credit score, so this is an important step in building a good reputation with lenders.
Consider including a personal statement on your credit report, if you feel that the circumstances which led to bankruptcy were beyond your control, such as a medical emergency or sudden job loss. Personal statements of 100 words or less allow you to explain why you filed for bankruptcy protection. If the reasons were due to conditions unrelated to overspending or poor money management, you may be able to sway lenders into being more lenient or softening your rates.
You should also obtain a copy of your credit report. Studies show that nearly 80 percent of credit reports contain some type of error. Make sure the information associated with your bankruptcy is correct. Dispute any erroneous information you see listed immediately. Vigilance goes a long way in boosting your financial condition, so keeping an eye on your spending, examining your credit report and being open with lenders about your situation may help improve your standing even before the bankruptcy is removed from your file.