Remember that the financial circumstances that lead to the bankruptcy filing are what damaged your credit. The fact you filed bankruptcy stays on your credit report for 10 years, and it becomes less significant the further in the past the bankruptcy is.
The truth is, post bankruptcy, you are probably a better credit risk after bankruptcy than before. If you are proactive, there is no reason why you cannot get back into a great credit score within 1 to 2 years time.
Two years after a bankruptcy discharge, debtors in Arizona, and most of the country are eligible for mortgage loans on terms as good as those of others, with the same financial profile of those who have not filed bankruptcy. The size of your down payment and the stability of your income will be much more important than the fact you filed bankruptcy in the past
A few recommended actions to help rebuild your credit post bankruptcy:
Rule of thumb, always be aware of your financial situation moving forward. Remember what got you into financial hardship before.
Save. Open a savings account, be a regular saver. Take a percentage of your paycheck and make yourself put it away.
RESIST! The urges to buy things you don’t really need!
This may sound easy enough, but pay all of your bills on time. No exceptions.
Talk to your banker, and tell them you want to reestablish your credit. A good banker should be able to help you find ways to do this. Perhaps he/she will suggest something that you’ve never thought of.
You will get solicited by credit card companies to take out a credit card. They know that you have time limits to file bankruptcy again, and are therefore not as much of a risk. Be careful because the interest rate might not be the best. You may want to take out a card with a decent rate and keep a small balance on this card. Make sure you pay off what you spend on it every month. One of the things that helps your credit rating is having credit available that you’re not using. That’s why you should have a small balance on the card, rather than a 0 balance.
Get a copy of your credit report. Usually credit accounts that are absolved with your bankruptcy are not removed from your credit report immediately.
Have derogatory credit items removed from your credit report. Sometimes items discharged in your bankruptcy can be removed from your credit report. Send a copy (not the original) of your bankruptcy discharge papers along with a letter to all 3 of the credit bureaus asking them to remove these items.
Have a strong documented rental history. Underwriters (the people that actually sign off on your loan’s approval) will look very hard at how you have paid your rent as they are going to replace it with a mortgage payment of equal or greater size. It is very important to be able to document your rent payment history very specifically.