The answer may be “No” now, but that’s not a “No” forever!

If you are about two years from your bankruptcy discharge and have reestablished at least one new form of credit (department store credit card, etc.,) you may have a chance of being approved for a loan or mortgage. Typically though lenders are looking to see that your bankruptcy discharge was at least three years prior to applying with at least two years establish credit. If you experienced a foreclosure or power of sale you may not qualify for housing insurance on your next real estate purchase.

Sometimes the reason you went bankrupt can also make a difference. Was it due to a divorce, or business partnership failure? There are some justifiable reasons why people declare bankruptcy other than just not paying their bills. Though most financial institutions are leery when reviewing prior bankruptcy applications, they are open to listening to how you have worked to reestablish yourself.

The easiest way to improve your credit rating is to secure a loan through a loan broker or high risk lender. They will charge you a high interest rate unfortunately, but that’s the price for reestablishing your credit. Repaid the loan as fast as possible. Make sure they report your repayment history to the credit bureaus because if they don’t, you are not clearly reestablishing your credit rating with them. Try to apply with various department stores for a low limit credit card. Or buying a piece of furniture on credit while you make monthly payments to pay it off. You will see many of these kinds of promotions at furniture stores throughout the year where you don’t make any payments on the item for six months to a year. I have even seen promotions where you don’t start making payments for two full years! But whatever you do, make sure you pay it off before the terms are over.

Though these are easy steps to reestablish your credit rating, it will take time to see it through. You must be patient. You are starting all over, like a student fresh out of school looking for their first car loan. You may need a cosigner or a co-borrower to make this happen. If so, only apply for a small amount, repaid the loan quickly and then try to apply for a another on your own strengths.

You may need to obtain several loans with cosigners and repay them all to reestablish your credit. After doing this a few times, it will be easier for a bank scoring model to identify that you have reestablished your credit, even though it is lower than you once had. You may find that if you included a bank as a creditor in your bankruptcy, that they may never want to lend to you again. Once bitten, twice shy. It may be wise to simply move on from that bank and find another bank willing to start over with you.

Prepaid Credit Cards

Another excellent way to kick-start your credit rating again is by applying for a pre-approved credit card. You can usually get approved for one of these credit cards so that you can buy items online, book rent-a-cars, hotels, etc. – you need this anyway, so you might as well get a card like this – it’s a win-win.

With these credit cards you have to give the creditor they money up front. You are basically depositing money and then using a credit card to access it.

Usually the amount of money you must deposit ranges between $500 – $1500 depending your financial situation. I have had clients who did this, and it greatly helped them rebuild their credit ratings and FICO scores. Banks and lenders want to see your spending and repayment history when they pull your credit agency report(s), so why not “give them something good to talk about”. The credit bureau can’t tell the difference between someone (like you) making payments on a typical credit card, and a credit card that has been paid upfront.

You can usually get approved for a credit card like this 1 year after you have been fully discharged by your creditors via your bankruptcy trustee (don’t even think about going through your personal bankruptcy without the employ of a professional attorney or law office that specializes acting as a intermediary between you and the creditors you were forced to default on.