In Part One, we discussed how a large down payment, installment credit and revolving credit could help you obtain a Modesto home mortgage shortly after bankruptcy. This article will focus on specific steps you can take to rebuild your credit to shorten the length of time you have to wait to get approved for a mortgage loan if you don't immediately qualify for one.
First, obtain a secured credit card. You will likely have a small credit limit ($500 or less) and you may even have to put down a deposit equal to the amount of your credit limit. With secured lines of credit, it's important to be wary of several factors so that you don't get hit with hidden fees and tricky terms. Look for cards with no application fees and low annual fees. Make sure the company offering the card regularly reports to all three major credit bureaus: Equifax, Experian and TransUnion. Otherwise, the account will have no affect on your credit score. Also, be sure that the secured card you choose converts to an unsecured card after 12 to 18 months of timely payments. Good behavior should be rewarded and this will reflect positively on your credit.
Second, if you can qualify for a secured line of credit, start a new account and charge small amounts that you pay off within 30 days. Never charge more than 30% of your credit limit and don't carry a balance. Contrary to what you might believe, carrying a high balance or maxing out your card is not a good thing, says Liz Pulliam Weston of MSN Money.
Third, check your credit report frequently and clear up any blemishes as quickly as possible. All accounts discharged by your bankruptcy should be marked as "included in bankruptcy." If not, contact creditors to make the adjustments. You can also ask them to remove records altogether. After you've got your credit score in the lender-friendly range, you will likely qualify for several types of mortgages at varying interest rates. If you need assistance with bankruptcy recovery or filing, contact an experienced Modesto lawyer.
