How to Recover After Bankruptcy & Foreclosure

Situations such as a bankruptcy or foreclosure can devastate your credit rating, and it can take years to recover from the damage. During this time, you'll likely experience a few loan denials or you may acquire higher interest rates on credit cards. While both situations are bothersome, bankruptcies and foreclosures do not last forever. Both remarks are deleted from your credit report within ten years (seven years for a foreclosure). Fortunately, you do not have to wait ten years to recover. There are ways to recover from a bankruptcy and foreclosure sooner.

Instructions

1

Practice good debt management with your existing debts. You do not have to include all your debts in a bankruptcy, and a foreclosure only wipes out your mortgage debt. Help your credit score by paying your remaining debts on time.

2

Submit an application for a small personal loan. Start fresh with a new line of credit. Use collateral such as your car title and apply for a secure loan with your bank or credit union. If necessary, use a co-signer to help you qualify. Managing this debt can help increase your credit rating.

3

Fix your credit with a secured credit card from your bank. Rebuild your credit history after filing bankruptcy with a secured credit card. Walk into any bank and ask for information on applying for an account. This requires opening a savings account with the institution and paying a security deposit.

4

Keep debt to a minimum. Pay off your new credit card charges every month to avoid accumulating a large balance. Having available credit on your credit cards raises your FICO score. Don't overextend yourself by opening several credit card accounts. Avoid overspending with credit by giving yourself a monthly spending limit.