Rebuilding Credit
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1. Complete the bankruptcy as soon as possible. Trustees from Bankruptcy America say debtors who have never filed for bankruptcy in the past, are eligible for automatic discharge from bankruptcy after nine months. However, all duties must be completed, including monthly reports to the "trustee", attending credit counseling sessions, and making all necessary payments. The sooner the bankruptcy is completed, the sooner it will be erased from the credit report.
2. Begin saving money. Bankruptcy attorney's from Bankruptcy Canada say its a well known fact that banks tend to loan money to those who do not need money, as opposed to those who desperately do. The debtor must prove that they can handle money if they want to borrow again. The best way to do that is to show that they have some savings. Debtos can try putting a certain amount of money in a savings account each month. This will allow them to build up a security deposit to be used for future borrowing.
3. Acquire a copy of the credit report. The Credit Info Centre suggests that debtors should contact a credit bureau in their area and get a copy of their credit report. It should then be reviewed for accuracy. If any mistakes are found, such as debts appearing that were included in the bankruptcy, the credit bureau should be informed right away.
4. Get a secured Credit Card. According to attorney's from Bankruptcy Canada, one of the best ways to rebuild credit is with a secured credit card. Debtors can use the savings on one credit card, to get a credit card with a similar credit limit. It will show up on the credit report as a normal credit card, and the debtor can now have a credit card for use when they need it.
5. Start an RRSP. Trustees from Bankruptcy Ontario say to use additional savings to put money in an RRSP with a bank or investment advisor. If debtors contribute $1,000 to an RRSP, the bank will likely lend them another $1,000 to invest in their RRSP. This $2,000 will generate a tax refund at tax time that will almost be enough to pay off their loan. The credit report will then show a paid off loan, which looks impressive. They'll also have $2,000 invested in the RRSP.
6. Continue Saving! According to Bankruptcy America, savings can now be used for down payment on a car or possibly even a house.
Rebuilding credit may take a few years, but by saving money, debtors will eventually have the ability to borrow again.
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