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Bankruptcy May Be Your Option

Is it possible to rebuild your credit after bankruptcy?

One of the stigmas associated with bankruptcy is that it is a credit killer. People think that if they erase or reduce their debts in bankruptcy, they will never be able to qualify for a line of credit -- let alone a mortgage -- again. Fortunately, this is only a myth. It is possible to rebuild your credit after obtaining a fresh financial start through bankruptcy in Oklahoma.

It is true that bankruptcy filers may be considered subprime borrowers, and this means they will face higher interest rates and stiffer penalties for defaults. You generally need a credit score of about 650 to receive reasonable rates; but, you can build your credit score back up to this point and even higher post-bankruptcy.

Here are some tips to strengthen your credit rating after bankruptcy:

  1. Open a secured credit card. To open a secured credit card, a consumer usually makes a deposit at a bank and the bank in turn provides a credit line up to a percentage of that deposit. You may earn interest on the deposit. Make sure to sign up with a bank that will report your limit to credit card bureaus and not report the card as a secured account. Do not go overboard using the card, as you need to make regular and timely payments to boost your credit.
  2. Look out for predatory lenders and watch your credit report. Payday loan companies and other scammers prey on those who have filed for bankruptcy. Build up an emergency savings account by putting away whatever you can in order to avoid falling into these debt traps. Additionally, watch your credit report and make sure to correct any inaccurate information.
  3. Do your homework before major purchases. If you have filed for bankruptcy, you may be approved for a car loan or a mortgage sooner than you think. However, you will have higher interest rates and you may face predatory lenders along the way. Before taking out major loans, talk with your real estate agent and/or the Better Business Bureau to learn whether a lender is reputable.

These are just a few things you should know about repairing your credit after bankruptcy. A skilled bankruptcy attorney can tell you more about the realities of credit repair.

Source: Bankrate.com, "Bankruptcy timeline: Rebuilding credit," Brigitte Yuille, accessed June 6, 2014

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