How to Rebuild Your Credit After Bankruptcy

November 10, 2008

Once your bankruptcy is discharged it’s critical to begin rebuilding your credit as quickly as possible. Improving credit will not only reduce your interest rates but it’s required in order to get a mortgage especially with today’s new stricter lending guidelines. The good news is that even though a bankruptcy will remain on your credit file for up to 7 years it’s possible to get a mortgage much sooner. There are some lenders who will give you a mortgage within 6 – 12 months but the interest rate won’t be very attractive and you will be required to come up with a larger down payment. However you can usually qualify for a mortgage with a good interest rate and normal down payment within 2 years. The key is to get started right away and work deligently towards your ultimate goal of home ownership.

Here are the steps you should take to rebuild your credit:
  1. After discharge check your credit report with the major credit bureaus and verify that there are no errors in your report. For Americans: Equifax, TransUnion and Experian. For Canadians: Equifax and TransUnion
  2. Talk to your bank and let them know that you want to re-establish your credit rating.
  3. If you don’t already have one; open a savings account and begin saving at least 5% of your income every month.
  4. Apply for a secured Visa or MasterCard from your bank. A secured credit card means that you deposit money either into a special account or your bank will “freeze” a certain amount in your savings or chequing account. This money is used to secure any purchases you make on your credit card.
  5. Charge items to your secure card and pay them off completely every month. As each month passes your credit rating gets better and better.
  6. In 3 – 6 months apply for a seperate unsecured credit card, either from your bank or another one.
  7. Another 3 months of on-time payments and you can apply to have your secure card replaced with a second unsecured card.
  8. At around the 12-18 month mark apply for a car loan, car lease, or another line of credit from a bank. This is the third and final credit account most banks look for when considering you for a mortgage.
  9. Finally at the 24 month mark it’s time to review everything and apply for your home loan!

Always Remember: During these 2 years it is absolutely vital that you never make a late payment!

This article is syndicated from Homes Everyday – How to Rebuild Your Credit After Bankruptcy


Cooperative Assignment 101: How I made $4,750 by solving 2 problems

November 4, 2008

Would you like to know about a real estate investing technique that’s simple to learn, works in all market conditions, costs next to nothing to use, and has virtually zero risk? Too good to be true? Here’s the catch: You’re not going to get rich off of one deal. Still interested?

The Cooperative Assignment (CA for short) is gaining ground as the tool of choice for many full-time investors and at the same time is recognized as a great way for beginners to get started.

So what is it?
A CA is where you take a Lease Option, Contract for Deed, or some other form of Owner Financing contract, write the terms to be attractive to both buyer and seller, and then market it and assign it to a buyer for an instant cash profit.

A CA turns you into a consultant who uses their knowledge of terms and marketing to bring buyers and sellers together in a win-win deal.  It allows buyers to get into a house faster, cheaper and easier, and gives sellers the chance to move on with their lives while making extra money from the sale of their property.

Things You Need
There are a few things you need to do a CA smoothly.

  1. ‘Terms’ paperwork. You can use a Lease and Option, a Contract for Deed, or anything similiar.
  2. Yard signs and directional signs to draw attention to the house.
  3. Voicemail so you can describe the house and terms ONCE instead of 100 times to 100 different buyers.
  4. Website to showcase the house (recommended but optional).

Things You DO NOT Need
For reference, and maybe a little inspiration, here’s a list of things you DON’T need:

  1. Lots of money ($50 should do it)
  2. Good credit
  3. A job
  4. A real estate license
  5. Fix-up skills
  6. Repair estimate skills

Now I bet you’re curious what a CA looks like on paper, right? Here’s one of mine so you can see how it worked out for everyone involved:

After calling several FSBOs from the paper I came across Mr. S. who had a 3 bedroom, 1.5 bath, 1-car garage townhouse for sale for $142,900.  He had already bought another house and needed this one sold or rented within 60 days. In 9 days I found a family eager to own their own home but needed some extra time to get their credit in shape to get a mortgage.  14 days later the deal was closed and I had my profit.

The Seller
$149,900 sale price, $300/month positive cash flow plus mortgage reduction and tax deductions, and pays no commission or closing costs.

The Buyer
Got out of their basement apartment and into a move-in condition townhouse with all the trimmings without the hassle of dealing with the bank or a realtor.

The Investor
For an investment of about $40 and 10 hours of my time, I made $4,750 cash profit in 3 weeks.

For more tips like this visit Homes Everyday – Real Estate for Smart People