Although it is possible for consumers in your situation to rebuild their credit rating after a bankruptcy filing, it will take a good amount of hard work on your part to establish a credit score healthy enough for you to qualify for a home loan with a reasonable interest rate within the next five years. Everything remains on your credit report for up to 7 years, however a bankruptcy remains on your credit report for up to 10 years: your bankruptcy can have long-lasting impacts.
You and your spouse’s bankruptcy filings will have essentially eliminated the positive influence on your credit score caused by your past payment history on the accounts you discharged in bankruptcy, so you will be largely starting from scratch in rebuilding your credit rating. This is especially true if you do not have secured accounts, such as a mortgage or auto loans, which would otherwise be exerting a positive influence on your credit rating, since these types of debts are generally non-dischargeable in bankruptcy. Before you begin working to rebuild your credit rating, I encourage you to learn more about credit reporting and credit scoring; the Bills.com Credit Resources page offers a wealth of information to consumers about credit and ideas about how to establish and maintain a positive credit rating.
You should start the process of rebuilding your credit by pulling a copy of your credit report from each of the three major U.S. credit reporting agencies — Equifax, Experian, and TransUnion. Each of these bureaus maintains independent records regarding a consumer’s credit history, so it is important that you request a copy of your credit report from each agency. Under federal law, you are entitled to a free copy of your credit report from each of the agencies once every 12 months; you can request your free copies by visiting Annualcreditreport.com.
Once you have obtained your credit reports, you should carefully review them to make sure that all of the information appearing on the reports is accurate. Ridding your reports of any old or inaccurate information which may be damaging your credit rating is a good first step in rebuilding your credit. If you find any credit listing that you feel is inaccurate, you should dispute the listing with the credit bureau on whose report the listing appears. Once you dispute an item, the bureau will investigate your dispute and contact the company that reported the information; if it finds that the listing in inaccurate, it will remove the listing from your credit report. The Federal Trade Commission offers a guide to disputing credit listings.
To rebuild your credit score after a bankruptcy filing, you will also need to start establishing new credit accounts and making timely payment to build a positive payment history. Your payment history accounts for approximately 35% of your credit score, so creating a new payment record is essential to rebuilding your credit score after bankruptcy. Since many credit card companies will not extend credit to people who have recently filed bankruptcy, and since you state in your question that you do not want to open new credit card accounts, a good option to consider is a secured credit card. Secured credit cards require you to deposit cash in an account with the credit card bank and the credit line available on the card is equal to the amount of cash you have on deposit. This may sound strange; why would you not just spend your own cash? However, these secured credit cards report timely payments to the credit bureaus each month and should help you reestablish your payment history. Also, small credit accounts, such as gas cards, can be a good option to build credit, but you should make sure that you pay off your balance each month to avoid finance charges and to prevent yourself from starting down the spiral of debt again.
The more time that passes, the less negative impact that you and your spouse’s bankruptcy filings will have on your credit scores. However, to build a positive credit rating you will need to counterbalance the negative impact of the bankruptcies with positive listings on your credit reports as mentioned above. As time passes, the positive impact of your new accounts will become stronger while the negative impact of your bankruptcy should become weaker, thus allowing you to slowly rebuild your credit score.
To learn more about credit scoring, I encourage you to visit the Bills.com Credit Score Information page.
I wish you the best of luck in rebuilding your credit rating, and hope that the information I have provided helps you Find. Learn. Save.