A bankruptcy will stay on your credit report for ten years. However, if you demonstrate responsible credit habits immediately after the bankruptcy, you will greatly improve the odds of getting the credit access you need at affordable rates. A bankruptcy is certainly a negative item and it will affect your credit report but it becomes less important over time particularly if you can prove you now have good credit habits
Getting a positive item posted to your credit report is as easy as getting a personal loan from your bank. Sound like a crazy idea? Not really, all you have to do is explain to your loan officer what you are trying to do and how the bank will benefit by giving you a loan.
As soon after the bankruptcy as you can accumulate $1,000, go visit the bank where your checking account is. Explain to the loan officer that you are trying to start rebuilding your credit and you would like to do this through a personal loan. Further explain that you would like to purchase a $1,000 six month CD from the bank and pledge that as collateral for the loan.
So now the banker is faced with an application for a six month $1,000 personal loan secured by his bank's own CD for $1,000. By granting the loan the bank sells a CD and earns interest off the loan itself. It is an easy decision for the bank.
What you get is an almost immediate posting of a loan on your credit report, and providing you make your payments on time, an immediate demonstration that your credit management is pointing in the right direction. Take the $1,000 from the loan and open a savings account. Use this money to pay back the loan. You will be out the cost of the loan interest but that will be offset somewhat by the interest on the CD and the savings account.
At the end of the loan you may want to consider repeating the process. At the very least ask your banker to make a recommendation for a secured credit card. If his bank provides that service make sure you can afford the fees and make sure the bank reports it as a standard credit card and not a secured card.
These are small but necessary steps in rebuilding your credit after a bankruptcy. You'll discover, providing you pay your bills on time, that your FICO score will improve dramatically over the first 9 months as it projects your behavior based on a responsible history, not just the bankruptcy.
Chris A Smith reports on consumer credit challenges like stopping harassing collectors, internet scams budgets and credit card law. Check out his great tips on bankruptcy, credit repair and more.
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