Establishing Credit After Bankruptcy

Tulsa Bankruptcy AttorneysIt is true that obtaining a new mortgage or refinancing an existing home loan that hasn’t been reaffirmed is more difficult after filing an Oklahoma bankruptcy.  However, a surprising number of mortgage lenders offer a multitude of financing programs targeting people with a recent bankruptcy.  One of the first things to remember is that each creditor has different policies and procedures determing how soon after a bankruptcy to approve a home mortgage.  In any event, the following are some helpful hints.  These intend to increase your credit worthiness as quickly as possible for those with a recent bankruptcy.

Steps to Build Your Credit After Bankruptcy

First, continue timely payments on items such as cars or home mortgages that you reaffirmed in your bankruptcy.  The reaffirmation agreement, along with allowing you to retain your secure assets, is the single most powerful tool for you in your effort to re-establish your credit rating.  In essence, the reaffirmation of secured assets and the timely repayment thereof, amounts to an approval of new credit immediately after a bankruptcy.

Second, if you are not currently working, find a job.  If you are working, maintain as long of an employment history with your current employer as possible.  A long employment history demonstrates a likelihood of continued employment.  Thus it provides a stronger probability that you will successfully repay your debts.

Third, get a credit card.  Overuse of credit cards may have initially instigated your credit problems.  But with restraint, self-control, and proper management, smart use of a credit card can pave the way to a healthy post-bankruptcy credit rating.  Many credit card companies exist for the sole purpose of making loans to those people fresh out of bankruptcy. Moreover, if you are a full or part-time student, you will find yourself flush with pre-approved credit offers.  These occur just because you are in school.  One you obtain your post bankruptcy credit card, use it wisely.

An example of smart use of a credit card is ensuring that at the end of each and every payment cycle, you have paid off the credit card in its entirety.  If you pay the debt off at the end of each month and make every payment timely, you will be happy at how quickly this positive repayment history impacts your credit rating.

Fourth, check your credit reports.  There are three major credit reporting agencies (Experian, TransUnion, and Equifax) that creditors can check to determine a person’s creditworthiness. It is not only a good idea to review what your potential lenders will be seeing in your credit reports, but it is also necessary to ensure that any pre-bankruptcy debts that were legally discharged in the bankruptcy have in fact been reported as discharged in your credit reports.  If properly recorded, your discharged debts should show in the credit reports as discharged with a zero balance. You should also check to ensure that reaffirmed debts are accurately reported. Lastly, reviewing your credit reports regularly can provide great feedback and proof of your credit accomplishments.  Also, you can see your credit score (FICO Score) grow over time.

Credit Reporting Agencies:

A good credit history together with your new lowered income to debt ratio will make you more appealing to mortgage lenders as well as helping to make the interest rate you pay on your new mortgage as low as possible, despite your prior bankruptcy.  You should visit as many mortgage lending websites to give you a better understanding of the policies each mortgage company has and the different mortgage lending interest rates charged by each for people who have a bankruptcy in their credit history.  Below are links to a few additional resources regarding establishing credit and loans after a bankruptcy discharge.

Tulsa's Local Bankruptcy Lawyers

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