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Tips on getting credit and a new mortgage after bankruptcy

There is no doubt that bankruptcy has some downside. In Arkansas and elsewhere, that consists mainly of a perceived devaluation of one's credit and the difficulty of getting future credit. Although that factor does exist, and despite the potential that a bankruptcy may be reported for up to 10 years,  there are nonetheless proven techniques for speeding up the process of regaining a top-of-the-line credit rating.

Initially, however, it is helpful to analyze the so-called credit rating decrease.  The fact is that the vast majority of people filing bankruptcy already have bad credit. The credit rating has already taken a beating, and many people so affected are unable to obtain credit. It is not, therefore, the bankruptcy itself that devalues one's credit rating; instead, it usually has been sliding down for a long time.

The bankruptcy may subtract a few more points, but from that point on, it is all downhill. This means that there are several practices to adopt after the bankruptcy discharge that will assure a steady rise of one's credit over a relatively short period of time. Anything that shows good faith, responsibility and stability will help to increase the credit score.

Thus, a person must remain working continuously to show absolute stability. He or she should choose a few small credit cards, secured or unsecured, and make the payments in full and early. If coming out of the bankruptcy with a car loan and/or a mortgage that is still functioning and up-to-date, then it is imperative to keep making those payments on time or -- preferably -- early.

Also, it's important to monitor the credit rating regularly and file objections where appropriate. With this kind of an effort, the rating will rise quickly, virtually on a monthly basis. If a down payment for a new home has been saved and there is a completely current record of timely payments since the completion of the bankruptcy, it is a good time to apply for a mortgage. Whether applying in Arkansas or another state, the degree of progress achieved in repairing one's credit standing will dictate any interest rate that is offered.

Source: investopedia.com, "Getting A Mortgage After Bankruptcy And Foreclosure", Phil Scott, March 27, 2015

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