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.

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

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 are 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 45% 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 45% 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 45% 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!

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.

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.

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).

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.

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.