Repairing Your Credit

• Even though bankruptcy does damage your credit significantly, it does not have to stay damaged forever. You can almost immediately start taking steps to rebuild your credit after bankruptcy has been completed. By taking some simple steps to rebuild your credit score, you can get it back up to a reasonable level and qualify for a traditional mortgage within a relatively short period of time after filing for bankruptcy. For example, you could open a secured credit card and then start making regular monthly payments on it. This will give you a positive payment history and help your chances of getting mortgage financing in the future.
  
  

Getting a Mortgage

• While some lenders may not want to work with you immediately after bankruptcy, a number of lenders may offer you a loan. Some lenders work with those who have filed for bankruptcy and offer them a way to buy a house. When you take a loan shortly after bankruptcy, you will typically have to pay a higher interest rate for it. You may also be required to come up with a large down payment for the house. This way, the risk is lessened for the lender because you are required to invest more of your own money in the deal.
  
  

Get Mortgage to Help Credit

• When you get a mortgage shortly after bankruptcy, you can actually use it to help repair your credit. By getting an installment loan, such as a mortgage, you will have to start making regular monthly payments to your lender. The lender will report each one of these payments to the credit bureaus and if you pay them on time every month, this reflects positively on your credit score. Having different types of credit also helps your credit score. By having an installment loan in addition to a credit card, you can get a good mix of credit going.
  
  

Two-Year Threshold

• Even though you can find some alternative mortgage lenders to give you a loan immediately after bankruptcy, you will have more options once two years have passed. After this two-year threshold, many traditional lenders may be willing to give you a regular mortgage loan. By waiting two years, the lenders will have time to gauge your new habits and determine if you have really changed or if you are still a risky borrower to work with.