Bankruptcy is never anyone’s first choice in dealing with tough financial circumstances. Nor should it be. Given the effects it imposes on your credit rating, it can affect your purchasing ability and in turn your quality of life. As such, it is most definitely not a decision to be taken lightly. But if you’ve already explored other options such as debt consolidation and debt settlement and taken a good, honest look at your finances, and bankruptcy looks like your best option, you are probably worried about what happens after bankruptcy. The good news is, your prospects after bankruptcy are largely dependent on how you conduct your financial life after your debts are discharge. It can provide a fresh new start for those who make the effort to educate themselves on finances and credit and use it as a motivation to learn to properly manage their money.

It’s undeniable that credit and personal credit rating are important to Americans. Your credit rating determines not just whether you get credit extended to you in the form of a credit card, home, car or even installment plan; it also determines what interest rates at which this credit will be extended to you. It is a common fear that filing bankruptcy will preclude you from being able to buy a house or car or even get a credit card. While it’s true these things all become more difficult and the terms less favorable, there are things you can do to start rebuilding and improving your credit score, and fairly quickly. It’s absolutely crucial during this time to start practicing good habits, and your efforts will be rewarded.

New start with a clean slate

Discharging debts as in bankruptcy gives you a clean slate, but your credit report is marked as bankruptcy for ten years. While this is unavoidable, it’s not as bleak as it may seem. Indeed, it is possible to have and build credit after bankruptcy. Houses, cars and credit cards can all be obtained if you know the correct way to rebuild your credit, and what indicators banks look for when deciding whether to extend credit to you. Creditors look at your payment history, checking for late payments. A history of late payments is the most damaging thing on your credit report. They also look at the number of accounts you have, in essence how much credit is available to you as well as how much of it you are utilizing. If the ratio of utilized to available credit is high, many creditors will be unwilling to extend you more credit. Additionally they look at the length of time you’ve had these relationships, or the length of your credit history.

Rebuild your credit the right way

Lenders rely on information and scores they receive from the credit bureaus in making their decisions to extend credit and at what terms. There are three credit bureaus, Experian, Equifax and TransUnion, and they may have slightly differing information, as not all lenders subscribe and report to all three. It’s important to monitor your credit report to check for misinformation, as the Fair Credit Reporting Act provides not only that you have a right to see what is on your report, but also to dispute incorrect items. The bureaus then have an obligation to verify disputed items in a timely manner. Any items not verified must be removed.

Rebuilding your credit after bankruptcy will likely require establishing some new accounts and using them in a very strategic manner, and being very careful to make all payments on time. With bankruptcy in your file, you’ll need to be extra vigilant in everything you do with regard to your credit.

We know what creditors look for and how to improve your score. Bankruptcy is not the end of your financial prospects. We can help guide you in the process if you choose to do so.