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Rebuilding Credit After Bankruptcy

Rebuilding credit after bankruptcy should not just be about becoming worthy of credit again but also developing the habit of saving money so that you do not always have to rely on credit to pay for your needs. Set aside as much as you can afford every month in a savings account and keep to it.

Rebuilding credit is not a very simple task and the results are not going to be immediate therefore, do not fall for any offer that claims to repair the situation overnight. Do carry out a good survey of the market before you choose your savings account and be aware of the market trends and remember not to default on any of your repayments. The reconstruction of your reputation as a borrower is a process which involves many variables. Factors such as the number of accounts, the average age of accounts, how many applications are made for credit, balances versus credit lines, and a host of other variables determine your credit scores at any given time. Rebuilding credit is not easy, it takes a lot of time and effort on your part as well as on the part of any financial service company which you engage to assist you. However, in the end, it is worth the effort rather than be entrapped financially throughout your lifetime.

After bankruptcy the rebuilding of a credit rating starts on the rock-bottom. This is not a nice place to be! You have to start rebuilding your reputation at the point where you will have a number of charge-offs and unpaid bills on your credit report. Of course, there will also be, to start with, the complete ineligibility for a credit loan of any sort.

Debt consolidators can negotiate smaller payoffs for you, and organize these payments, and then the bankruptcy court pays everyone less than is owed. You just make the one payment to them. Lenders who focus on bad credit loans also tend to offer loans with higher interest rates, to offset the bigger risk they take in dealing in what they would see as the less responsible borrowers. Higher interest rates equate to higher monthly payments, and this is bad news all round.

According to a mortgage lender called Bankruptcy Loan Experts (BLE); a mortgage lender that works with poor credit rated individuals to improve their credit. They have found from their 10 years of experience working with the credit agencies on bankruptcy mortgage, that loans bankruptcy is a good teacher.

Those that have been through it seldom if ever will want to repeat it! BLE has served the ex-bankrupt and low credit score /sub-prime market throughout the last decade, to become a business dedicated to proactively and progressively improving their clients' credit. They say that they have found time and time again that bankruptcy victims tend to become reformed borrowers, and once their company has got to know them they are a remarkably low risk to client base to lend to.

So, in summary: After bankruptcy you might initially have to pay higher interest rates (once you regain the ability to obtain credit), than borrowers with sparkling credit histories.

However, if you have a good steady income from your employment and maintain perfect payment records, and place money into savings, over a period of time, you should be able to raise your credit score and secure lower rates after a few years.

There are many more essential articles related to rebuilding your credit at The Free Credit Report informational (web) site.

Steve Evans is also a regular contributor of dog breed related articles at The Dog Breeds Compendium.

Article Source: http://EzineArticles.com/?expert=Steve_Evans

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