AFTER BANKRUPTCY: APPLYING FOR CREDIT

AFTER BANKRUPTCY: APPLYING FOR CREDIT - Many people who have filed bankruptcy in the past apply for credit the wrong way.

They fill out a credit application and hope for the best. Best case, they probably end up paying a lot more in interest and finance charges - hundreds or even thousands of dollars more, depending on what theyre buying.

Time will be your biggest Allie when trying to re establish credit after bankruptcy. BY taking the time to open smaller accounts paying them on time and slowly moving on to larger accounts you will see your score jump. But none of this will happen in a matter of days or weeks. Have the patience and the plan and your credit will once again be good to perfect even with a bankruptcy in your past!

Remember that credit reports are not always entirely accurate, so it is important that you check it for any errors, particularly if your credit score is in such a precarious position. One amendment in your favour could mean the difference in being turned down for a home loan and being accepted.

If you have a mortgage, but then declare yourself bankrupt, you can keep your property but may only maintain a certain amount of equity within it. The equity levels are known as the homestead exemption and vary from state to state.

Also try working with a credit union can allow you to build up your credit, because credit unions are easier to setting up accounts with. Also be sure to pay all your current bills on time, so that you won't be in a similar situation down the road.

Many times people believe they cannot get back on their feet after a bankruptcy, but usually it is a clean start. This would be a good time to ask your mortgage consultant on what your optios are email me dsewell1974@yahoo.com for information on how I can help.

Having a perfect mortgage history after bankruptcy will help you when applying for credit.

After bankruptcy you can take steps to improve your credit. It is important to make timely payments. Even though you have filed bankruptcy, there still are home mortgage programs available for you.

That said, in this article we are going to talk about the RIGHT way to apply for credit and loans. So what is it? Well there are three steps:

1) Learn how to increase your credit score

2) Know the credit approval process

3) Know how to apply for credit and loans

Now, you want to get all three of these steps right. Not just one or two, but all THREE! See if you miss one, or don't do it just right, you can end up paying $100s, $1,000s or $10,000s in additional interest and finance charges, depending on

Here are the three steps in more detail...

Step One: Learn how to increase your credit score.

Increasing your credit score is a key factor in lowering the interest rate you pay on loans and getting approved for them as well. Unfortunately, there are a lot of myths out there that can actually hurt your credit score.

There a number of ways to increase your credit score. One way is to watch your credit card balances. Lenders don't like to see them go above 50% of the available credit limit.

For example, if you have a credit limit of $3,000 and you're current balancing owing is $1,800 (60%) that can hurt your credit score. In this situation, there are two ways you can fix the problem.

First, of course, is to pay the balance down so that it's less than 50% of the credit limit. The other way is to get a credit limit increase:

If you can get a credit limit increase to $5,000 that will means you will be at less than 50% of your credit limit ($1,800 balance versus $5,000 credit limit). And you didn't have to pay down the balance by a penny!

Another way to increase your credit score is to add years of positive credit history to your account. Most people don't know about this and it's 100% legal. But that's another article in itself.

The point I am trying to make is that there are a number of strategies you can use to increase your credit score. Best of all, many of them can be implemented quickly and easily.

Step Two: Know the credit approval process

What do potential lenders look for? Here you need to know the questions to ask. For example, do they work with people who have had a bankruptcy in the past? What is the minimum credit score they want to see? These are just the initial questions.

There are a number of other questions. There are also a number of items that send up red flags if a lender sees them on your credit application - ones that could jeopardize your chances of qualifying for the loan or cost you more money in interest.

Another factor when applying for credit and loans is timing. You don't want to apply for credit and loans until you've increased your credit score (most people make this mistake).

That brings us to step three...

Step 3: Know how to apply for credit and loans.

Knowing which lenders to approach and how to negotiate with them is also really important.

Apply for a loan or credit with the WRONG lender and you're practically guaranteed to be turned down; or, you end up paying a pile of interest.

Then there's there is the negotiation process. This especially important when you're buying a car - for example, people will spend a lot of time negotiating the price of the car they're buying and the value of their trade in (if they have one) - and STILL be taken advantage of. They don't know how to REALLY negotiate for a car.

Think about it. How often do you buy a car? If you are like most of people it's probably once every so many years. Now, how many times a day do you think a busy car dealership negotiates with buyers? Multiply that by weeks, months and years and you can see that they have slightly more experience.

You should now have an idea of the RIGHT way to apply for credit after bankruptcy. Though I wasn't able to go into detail on ALL of the strategies you can use to increase your credit score and qualify for credit and loans at more reasonable rates this should at least give you a starting point.

For more info contact your mortgage consultant now! dsewell1974@yahoo.com

After a bankruptcy, it is important that the consumer re-establish his/her credit. This is accomplished by opening credit accounts and using them responsibly, avoiding any late payments and high balances.

How a borrower has re-established and used credit after a BK is one of the primary considerations of the lender when deciding to approve a home mortgage to a borrower with a past bankruptcy.

One way to obtain a credit card if your credit scores won't allow you to qualify is to apply for what they call a secured credit card. You can get this from your local bank. In this case you would put up $100 dollars as a safeguard to allow you get a credit limit of $100-$200. Only use this for items you would normally buy such as groceries and pay it off every month. This will give you one open trade line. You may need a few open tradelines to qualify for a mortgage.

Even though the credit card is secured by your own funds it is very important that you make timely payments. Any late payments after a Bankruptcy will severely limit your options.

Refinancing your mortgage after bankruptcy and making timely payments can help you rebuild your credit to potentially higher levels than even before your bankruptcy within as little as two years.

Bankruptcy laws are always changing and may or may nor affect your current living situation. Always consult a professional regarding the ramifications of filing bankruptcy.

Post Bankruptcy Credit Rebuilding - During bankruptcy your credit will be damaged from creditors updating account status as "account included in bankruptcy" These accounts will all have an unpaid balance. The first step in increasing your score after your bankruptcy is discharged is to update these balances with zero. Send out letters to the agencies indicating "included in bankruptcy, change balance to zero". Your score will increase for each account with this status change.

Rent to Own centers are a great place to rebuild credit after bankruptcy. These stores often will approve a loan for anyone that has the income to pay the loan back and has good job time. You will end up paying more for an item then if you just bought it but the positive affects it will have on your credit score are worth it.

You can continue to rebuild your credit by getting a secured credit card. With these cards you deposit a set amount of money which you can then draw on using the charge card. These card's are reported to the credit bureaus the same as a regular or unsecured credit cards. Be sure to shop around to find the card with the lowest fees.

Continue to follow up and review your credit report. Many times, old accounts that have been cleared will continue to linger on your report. Take a look at your credit report periodically to make sure there are no errors.

When considering rebuilding your credit after bankruptcy its important to realize its going to cost a little interest. The secured credit cards will have higher rates, thats ok. One trick is to open a jewlry account with a jeweler that offers in house financing. Make sure they report to the credit bureaus prior to opening the account. Some offer the financing but don't report. You can finance a piece of jewelry for 6 months. Make sure you don't pay it off early. The entire goal is to have the item report positive on your credit.

When applying for a mortgage after a bankruptcy, the lender will closely scrutinize your payment since the discharge date. The lender wants to see a perfect payment history with no thirty day lates on your mortgage history or other consumer credit lines. If you have multiple late payments following a bankruptcy the lender may see this as a continuing pattern and it could be difficult to qualify for a mortgage.

Getting a cosigner is a great way to re-establish your credit rating after a bankruptcy. Get a small loan that you can easily repay, and make all the payments on time. Once this loan is paid off, go back to the same place and ask for another loan, this time on your own.

New Bankruptcy Laws - What They Mean to Consumers - With the new laws that went into effect in October 2005, many consumers are finding it more difficult to file Chapter 7 bankruptcy. Under the old laws, consumers could file Chapter 7 and wipe out most of their unsecured debt completely.

Under the new laws, they must first attend counseling, which helps determine if they can file Chapter 7 or Chapter 13. Most higher-income consumers will be forced to file Chapter 13, which is a debt repayment plan that doesnt wipe out the debt until the repayment plan is finished.

You can still pay off your Chapter 13 bankruptcy through a refinance. Many lenders have programs that allow you to pay off your Bankruptcy using the equity in your home.

There are some lenders who are willing to lend as soon as one day after bankruptcy has been discharged.

Speciality lenders will loan to borrowers in a Chapter 13 plan. The first test is the borrower must have paid on time to the trustee for at least six months. Some lenders want at least 12 or 18 months with no late payments. The next step is to get approval to pay off the chapter 13 plan from the trustee handling your case. The test for approval is the refinance must show a benefit over the current payment plan. If approved, the lender will need to see the trustee approval. The rest is a combination of credit score, ltv, and income with the specialty bankruptcy friendly lenders willing to lend with scores in the 500's with homes that have a high amount of equity.

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