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How Bankruptcy Affects Your Financial Reputation
Posted By Ron On March 6, 2013 @ 6:00 AM In Credit,Debt,Money | Comments Disabled
Your credit report is an official record of how you’ve used and managed credit (borrowed money) in the past. Every time you apply for a loan, lenders examine your report or credit score  to assess your “financial reputation.” That’s really what the information in your credit file is – a listing of your financial history and an inference of how you will repay future debt. Bankruptcy severely damages your financial reputation.
Chapter 7 bankruptcies usually remain on your credit report for 10 years after your discharge date. Chapter 13 bankruptcies remain on your credit report for seven years. Any bankruptcy on your credit file can automatically give you a bad financial reputation, even if your financial record since your filing date has been perfect.
Just like you probably don’t want your family to hang out with people having a bad reputation, banks and other financial institutions don’t want their money in the hands of anyone having a reputation of NOT repaying loans. Bankruptcy broadcasts to others that, at least recently, you were unable to make regular payments on your debt. In particular, bankruptcy can reduce your:
Despite the negative effects bankruptcy has on your credit rating, you can still get credit afterward. The most difficult time to get credit is immediately after you file, but over time lenders will feel less anxious and will offer you loans at rates approaching those available to borrowers with better credit. Generally, you should wait at least 18 months after your filing date before trying to get new credit. At that point, your wisest step is to apply for a secured credit card .
Secured credit cards  are credit cards  that require you to deposit a certain amount of cash into a savings account  to which you and the credit card  company have access. This cash deposit serves as collateral against your credit limit, the amount of credit that the secured card gives you. If you fail to pay your secured credit card  bills, the company that issued your card can withdraw funds from your savings account  equal to the amount you’ve failed to pay.
Secured credit cards  look just like regular, unsecured credit cards. The amount of money you must deposit varies but usually equals 50–100% of the credit limit (though some lenders require only 10–20% of the credit limit).
After obtaining and responsibly using your secured credit card , you’ll have proof that you can manage credit responsibly, and you’ll begin to get additional credit more easily and at better interest rates.
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