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  • When you file for bankruptcy, the bankruptcy filing will appear within your credit history. A bankruptcy is a derogatory notation on your credit file and can result in your credit score dropping up to 100 points--sometimes more. The Fair Credit Reporting Act states that a bankruptcy may remain on your credit report for up to 10 years. You can, however, begin rebuilding your credit immediately after your bankruptcy is discharged, even if the bankruptcy still appears on your credit report.

    Apply for a Credit Card

    Do not let it surprise you if you get plenty of credit card offers immediately following your bankruptcy discharge. This occurs because the credit card companies know that immediately after a bankruptcy discharge you are not permitted to file for bankruptcy again for several years, depending on the type of bankruptcy that you filed. Because of this, many credit card companies will be more than happy to extend new credit to you. Even if you are bombarded with credit card offers, remember that credit card companies can claim that you are "pre-approved" yet still turn down your application. If this occurs, you may want to look into secured credit cards. Secured credit cards come with higher interest rates and fees than the unsecured variety, but they often do not require a credit check. To qualify for a secured credit card, you must make a down payment to the credit card company. This amount serves as your spending limit on the card. Ensure that the secured credit card company reports its accounts to the credit bureaus, however. Regular reporting to the credit bureaus is necessary for you to begin to rebuild your credit.

    Manage Debt Responsibly

    You may have debts that you reaffirmed during your bankruptcy, such as money owed on your home or car. Any debts that you decided to keep can help you rebuild your credit. By paying your bills on time every month, you establish a history of timely payments to your creditors. These timely payments are noted within your credit file and serve to raise your credit score. If you make a payment to a creditor a mere 30 days late, however, you can expect your score to suffer. Your payment history on your accounts is responsible for an incredible 35 percent of your credit score. Another aspect of rebuilding credit after a bankruptcy and managing debt responsibly is not taking on too much debt. The amounts you owe to your creditors is responsible for 30 percent of your credit score. Although a home loan is expected to have a high balance, any revolving debts, such as credit cards, that you have accrued since the bankruptcy are not. Keep a low balance on any credit cards that you own while paying your creditors on time and you will see a definite improvement in your credit score after a bankruptcy.

    Source:

    CardReport: The Fair Credit Reporting Act

    Bankrate.com: 10 Questions Before Getting Secured Credit Cards

    MyFICO: What's In Your FICO Score

    More Information:

    Federal Trade Commission: Credit Repair--How to Help Yourself

    Experian: Credit Score Basics

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