After receiving your bankruptcy discharge, it's best to immediately begin rebuilding your credit history using a combination of secured credit cards and eventually other types of debt instruments. However, some post-bankruptcy debtors fail to develop a diverse credit history and may find themselves unable to qualify for some types of loans because of their limited credit history even if they have a good credit score. What can a post-bankruptcy debtor do to combat this type of problem?
Let's take a look at a few possible solutions:
- When you first exit bankruptcy, make sure that you apply for a secured credit card immediately. With a secured credit card, you will immediately begin to rebuild some type of payment history on your credit report. But don't stop with only one credit card; think about getting a different type of unsecured revolving debt.
- Next, after you have built some type of payment history on the secured credit card, you should be able to qualify for a small installment loan. For example, a car loan will help you build some diversity in terms of the types of credit you are accustomed to paying. But there are other types of installment loans besides a car loan, including student loans and personal loans. Once regular payments on your installment loans are reported to the credit bureau this should help to resolve you're the "limited credit history" dilemma. However, be prepared to pay a little more in interest on installment loans after bankruptcy at least until you can raise your credit score to the upper 600's or 700's.
- Finally, make sure that you begin to apply for these different types of credit immediately after you exit bankruptcy, don't delay. Also, make sure that the creditors are reporting your payments to the credit bureaus. Some vehicle finance companies operated by car dealers may not report payments, double check and make sure they do before you agree to the loan.