Many people have the false notion that bankruptcy puts an end to all great opportunities such as obtaining mortgage.

On the contrary, after filing for bankruptcy, applying for a mortgage is easier because your debt to income ratio has significantly dropped.

Of course, an individual who have filed for bankruptcy must wait until the bankruptcy has been  discharged and they have started to rebuild their credit.

Don’t apply for a loan too fast

If you try to apply for a loan immediately after your bankruptcy has been discharged.  If you get approved by a lender, you can be sure it will be at a VERY high interest rate.  By allowing at least 12 months to pass by, you can work on your credit  and concentrate on building good, solid tradelines.

Rebuilding Your Credit

The first step in rebuilding credit would be to start opening new accounts.  Most people start with a secured credit card.  There are also unsecured bad credit credit cards available, but when you are rebuilding your credit with the hope of buying a home in a year or 2.  You want to build credit lines that are large.  Most unsecured bad credit cards will only give you a credit limit of around $300.

The advantage of a secured credit card is 2 fold.

• A secured credit cards limit is based on how much YOU put down as security.  The more money you can save for your deposit the better.
• Most secured credit cards will become unsecured if you make timely payments.  Generally the bank will hold on to your security deposit for 2 years as they observe how you pay.  If your goal is to buy a home in 2 years, you can put this security deposit towards your new homes down payment!

Open A Variety Of Credit Tradelines

Make sure you open a variety of accounts.  You want to be able to show that you are now able to make your payments on time.   Here are a few types of accounts you should try to obtain during your credit building process:

• gas credit cards
• retail cards
• small personal loans
• merchandise card ( IF AND ONLY IF it reports to the credit bureaus )
• Use companies like Rental Karma to add your rent payments to your credit report

Opening new accounts will show the lenders that you can now handle credit responsibly.   at least one new account will give you the chance to have a fresh start and raise your credit score.

Don’t Try To Apply For All The New Tradelines At The Same Time

Don’t try to apply to different creditors at the same time, as too many inquiries on your credit report would only have a negative impact on your credit rating.

A big mistake I see a lot of clients that have filed for bankruptcy make.  Is to apply for credit cards that require good – excellent credit.  They feel that now that all their debts have been wiped clean.  That does not mean its time to apply for an American Express card!  Don’t make this mistake.  Instead, apply for credit cards that cater to consumers with bad credit.

Get In The Habit Of Paying All Your Bills On TIme

After bankruptcy, you are in a very vulnerable situation, so be particularly aware of your spending. Make sure that you do not borrow more than what you can pay back in a month. Missed payments hit your credit score HARD.  Missed payments after filing for bankruptcy tells a lender you may not be ready yet to take on the financial obligation associated with a mortgage.

Monitor Your Credit Report

Check on your credit report and see to it that all your payments are accurately reported to the three major credit bureaus (Equifax, Experian and Trans Union). Don’t forget to check if there are any mistakes or erroneous details in your report because these can dramatically lower your credit score. If you notice any false detail that needs to be changed, inform your creditor and the credit bureau who issued your report. See to it that your report will be updated.

Following these steps should get you through until your credit status improves. After a year, you should be able to see an improvement in your credit score and this will enable you to get better rates from lending companies when you apply for mortgage.