It takes time to improve credit scores after bankruptcy.
Right now there are mortgage programs where you can obtain financing with a credit score in the high 500's, but with your recent bankruptcy, that would probably not apply to you.
Bankruptcy does not prevent buying a house. Your credit score does. Bankruptcies can stay on your credit report for “up to” 10 years.
Also, many times the bankruptcy itself does not remove the discharged items from your credit report.
It should, but many bankruptcy attorneys simply do not take the steps necessary to remove them. They don't consider it that important.
They are wrong!
You will need a complete credit report restoration to qualify for a loan, because it is not just the bankruptcy that is showing up on your report. It is all the delinquencies, late pays, charge offs, collections, judgments, etc. that led up to the bankruptcy.
Credit restoration can legally and permanently remove inquiries, late payments, charge offs, tax liens, child support, collections, foreclosures, judgments, student loans and, yes, even bankruptcies.
Your bankruptcy is relatively recent. Your discharge only occurred two months ago. You may have to be a little patient.
Things can be fixed, but it cannot happen over night. If someone tells you it can, it does not pass what I call the TGTBT (Too Good To Be True) test.
Be very suspicious of that person. He or she does not know what they are talking about, or they are flat out trying to con you.
Although I have seen bankruptcies legally and permanently removed from credit scores in as little as 4 months after a bankruptcy, it is unusual.
You don't have to wait 7-10 years, but two months is a little soon.
Start saving money now and when a year has passed since your bankruptcy, think about engaging a credit restoration service to repair your credit.
It will take them time, maybe up to an additional year, but it can be done.
In the mean time, you will have accumulated more money toward your deposit and closing costs.
Your real focus needs to be to make a significant improvement in your credit score. Removing the bankruptcy will do that.
So will on time any new debt, but there is other work to do as well.
Assuming you have the demonstrable income to support it, thoroughly cleaning your credit may be the key to that new house of yours.
Credit bureaus do a marvelous job at finding and listing derogatory items. That is essentially what they are paid to do and they do it well.
However, in their zeal to be thorough, they have developed systems that, in my opinion, amount to over-kill and unnecessarily hurt consumers.
Even something as trivial as having your name listed different ways (such as with a middle initial and without one) can lessen your credit scores.
Each small difference is called an alias or a/k/a. They are looked on negatively, constitute derogatory items and hurt your credit score.
Even something as insignificant as having a period after an initial on one listing and not having a period after the same initial on another, can constitute an alias.
Multiple aliases damage your credit score and you should remove them from your report.
Having multiple addresses also hurts, because it appears to the program to be a sign of instability.
Just like with your name, any little discrepancy between listings constitutes a different address, even if looking at the address on the report, you can clearly see that they are the same location.
For example 123 Market Street E, Notown ME 12345 would be considered a different address than 123 E Market Street, Notown ME 12345 and would hurt your credit score.
Computers generate credit reports and scores. The systems pick up and list everything they can find. They do not look to hard to see if an item they list is already there in one form or another. They list them all. This creates a system bias against good credit.
In their effort to make sure the "bad guys" don’t get credit (protecting the lenders and creditors who pay them), the credit reporting agencies, like Experian, Equifax and TransUnion, have taken an extremely conservative approach.
They have all programmed their computers to treat every little thing as if it matters, even if it would not matter at all to you, me, or to a rational lender.
The consequence is that just about everyone has damage in his or her credit reports. You have more damage than some, because of your bankruptcy and the circumstances that led to it.
From the consumer standpoint, we often pay more for credit than we should.
From the lender’s point of view, they are protected from lending to unstable, untrustworthy individuals (and they also make more than they should on the other consumers who get tagged because of this, in my opinion, overly-cautious approach).
Remember, the credit bureaus are paid to list and report items. The more they report the merrier. Consequently, they are incentivized to add items and keep them on the reports as long as possible, even to the detriment of the consuming public.
There is little incentive for the credit bureaus to remove items. So it is important to do it right so you can legally force them to remove what does not belong.
Aliases and multiple addresses (whether yours or not) can represent up to 20% of your credit score.
A good credit restoration company will also address these things.
Be careful in selecting a credit restoration company.
If you start looking now for a credit restoration service, be sure to pick one with a proven record of success.
Choose one that offers written guarantees and can point to years of achievement, with references to prove it.
Do not allow yourself to be the next experiment of someone who thinks he/she can, but has yet to master the intricacies of credit repair.
Do not allow yourself to be persuaded by price alone either. Price is only one factor. Success is your goal, because that will save you far more in the long run.
Permanently and legally restoring credit is hard work. It is not easy to do and takes a significant investment of time, know-how and resources.
If a prospective service is too inexpensive, you can be assured you will not like the results.
Some will say you can do it yourself. This is true, of course, if you have the time to do all the research you would need to do so that you do it right.
You can represent yourself in court, but would probably be better off with a competent lawyer.
You can sell your home on your own as well. But a good realtor can add tens of thousands to the proceeds and take months off the time it takes to sell.
Just like there are good and not so good lawyers and good and less good realtors, there are credit repair services that are worth their weight in gold and then there are others.
There are many panderers out there, offering the magic “14” secret/special letters. There are no secret letters that work every time, no matter what anyone says.
In fact, using some of the form letters that are out there, can flag your dispute as canned and cause it to be maintained on your report for that reason alone.
Be very careful. It is your credit we're talking about here.
There are also plenty of “wannabees” out there. These are people and firms that see credit repair as a quick fix and easy way to make a fast buck.
Don’t allow yourself to become their next experiment on what to do and how to do it. It will be you who suffers.
If you shop only price, you will get what you pay for.
Beware of the quick fix. Many times a challenge can result in a removal, but it is illusory.
If it is not done correctly, the "removed" items can pop back up in 30-90 days and make matters even worse.
Once they come back, they don't come off so easily and may stay on your report for years.
Look for a service that permanently and legally removes the items and guarantees results in writing!
Done right, credit restoration can result in 100+ point increases in your credit scores and permanently and legally remove derogatory items.
Done incorrectly, it can damage your report and put lasting scars on it.
The Romans had it right. “Caveat emptor!” Buyer beware!
In the thousands of years since the founding of Rome, things have not changed that much.
You may be able to buy that home you want so much, but you have work to do first. Be selective in those you choose to help you.