Credit after Bankruptcy
From the mid 1990’s until 2008, investing in real estate was the hottest game in town. Real estate investment was believed by almost everyone to be the sure thing and the most safest investments. Eveyone and their neighbors were either real estate investors and/or wanted to invest in real estate. Homeowners throughout the country saw the equity in their homes grow by double digits. Homeowners were investing every dollar they could in improving their owner occupied homes by updating them and doing major additions believing they were investing in their homes and hoping the equity would keep growing year after year. Home Depot’s, Lowes, and Menards were popping up everywhere. Contractors, real estate agents, mortgage brokers, appraisers, and real estate attorneys were having stellar year after year. Then the financial and real estate meltdown of 2008 struck like lightening.
2008 Real Estate and Credit meltdown
The real estate and credit meltdown of 2008 has hit every American from left field. It hit homeowners and every consumer like a tornado. Bankruptcy rate soared to historic highs and foreclosures were on every block of American neighborhood. Entire industries were evaporating. A substantial of mortgage companies went out of business overnight. A substantial of real estate companies vanished. Unemployment rates were reaching double digits. Half the mortgage loan originators in this country were forced to leave the industry and got menial jobs, some making minimum wages while others flocking back to schools to learn new trades.
Obtaining Credit After Bankruptcy
For those who had no way out, they were forced to file bankruptcy. For folks who have filed bankruptcy, they should feel grateful because they have a fresh start. Credit after bankruptcy is not easy. Credit after bankruptcy should be a priority for those who have recently filed bankruptcy.
Bankruptcy And Credit Scores
A bankruptcy can lower a person’s credit scores by 200 points. However, the good news is that even though you do nothing to reestablish your credit, your credit scores will naturally improve as time passes. For example, if you had a 650 FICO credit score prior to bankruptcy and you just filed bankruptcy, your credit scores will probably be at or around 450 FICO. Say you do not do anything, get new credit or repair your credit, after bankruptcy. Your credit score will probably be around 550 FICO one year after your bankruptcy discharge.
Rebuilding Credit After Bankruptcy
However, if you have reestablished your credit via credit repair or getting secured credit cards to reestablish your credit, your credit can exceed the 650 FICO score mark. As your bankruptcy ages, it will have less impact on your credit scores.
The Power Of Secured Credit Cards
You should try to get credit after bankruptcy. Credit after bankruptcy can get started with the utilization of secured credit cards. Each secured credit card should boost your credit scores by 30 points or more. Try to get three secured credit cards. If you need to get an automobile and have the cash to buy it, take a step backwards and see if you can get an installment automobile loan. Say you have $2,000 to purchase a $2,000 car. See if you can make a $1,000 down payment and get a $1,000 automobile loan. This automobile loan will help you reestablish your credit and improve your credit scores. Having a variety of different types of credit will optimize raising your credit scores.