Painless Credit Repair

Rebuilding credit after Bankruptcy and Foreclosure may at times seem like a very difficult thing to do, but by following these easy steps you can have your finances in order again in no time at all. Whether you are trying to rebuild your credit after you have had a home foreclosed on you or you are trying to rebuild your credit after filing for bankruptcy both processes are extremely similar.

The first and most important step into rebuilding your credit is to obtain a copy of your credit report from all three credit repositories, Equifax, Experian, and TransUnion. By reviewing a copy of your personal credit report you will be able to first make sure there are no current errors or inaccuracies contained within your report and second you will be able to see where you currently stand and how good or bad your credit actually it. Obtaining a copy of your credit will provide you with your starting point and make it easier for you to see where you are at and where you need to go.

Secondly, you will want to reestablish your credit by obtaining 2-3 credit cards and possibly one other type of debt, such as an auto loan, a personal loan, etc… Ideally, you want to have 3-4 new credit trade-lines to begin reestablishing your credit history. Believe it or not, credit cards, even with small maximum credit limits are probably the most important item to rebuilding your credit and increasing your credit scores quickly and efficiently. Credit cards show a payment history pattern, responsibleness with open credit, and usage patterns. The credit bureaus can measure a person’s credit history much better through open revolving lines of credit, such as credit cards, than other types of installment debts, such as auto loans. The most important things to remember with reestablishing credit are to make all of your payments on time, never borrow over 50% of whatever your maximum credit limit is on any credit card, develop a long established credit history and don’t close down credit accounts once they are paid off, limit the number of credit applications that you apply for and finally try to maintain a good mixture of various types of credit (for example 2-3 credit cards, 1 installment loan, and eventually 1 mortgage loan).

While on the road to financial recovery, make sure that you maintain adequate auto and health insurance. Medical bills are one of the top reasons that consumers file bankruptcy throughout the US. Living without having one of these types of insurance is extremely risky and can possibly ruin everything you are trying to regain if anything serious was to happen.

Finally, make sure that you create a household budget for you and your family. Set goals, write them down and work hard towards achieving these goals. Set money aside from each and every paycheck to put towards savings, retirement, a little safety net, etc… Do not live on credit and make sure that you only buy what you truly need and what you can actually afford. For more credit tips and helpful information please visit this very informative Credit and Credit Scoring Blog.

The author of this article, Dave Zwierecki, is the President of First Security Financial Service and has over 10 years of experience in the credit, mortgage lending, and home improvement fields. He is the owner of http://www.GoFirstSecurity.com and http://www.TheMortgageU.com, which are both sites devoted to the education of consumers regarding real estate, mortgage, credit, and home improvement related material.