Rebuilding Credit After Bankruptcy
Will Bankruptcy Negatively Impact My Credit Score?
If you have made the decision to file for
Chapter 7 or
Chapter 13 bankruptcy, you have probably heard that it could have a negative impact
on your credit score. Unfortunately, this is true. However, you should
also know that the lingering effects of your bankruptcy do not have to
be permanent. As long as you take the right steps to rebuild your credit
after bankruptcy, it won’t be long before your credit score starts
to bounce back.
There are many ways to rebuild your credit after bankruptcy, including:
- Check your credit report annually and report any errors
- If you don’t qualify for a credit card, apply for a secured card
- Create a monthly budget and pay all of your bills on time
- Avoid utilizing a large amount of your available credit
#1: Review Your Credit Report Annually
Once you have completed the
bankruptcy process, it is important to know exactly where you stand. Start by requesting
a copy of your credit report from all of the major bureaus: Equifax, Experian
and TransUnion. You are entitled to one free copy of your credit report
each year. If you notice that any of these reports contain inaccurate
or inconsistent information about your debt or payment history,
you can and should dispute it.
#2: Start Using a Secured Credit Card
One of the most effective ways to rebuild your credit after bankruptcy
is to start using a secured card—since you may not qualify for a
traditional credit card. With a secured credit card, you would deposit
money into a savings account and use this deposit to secure a line of
credit. Your credit limit would then be the amount of the deposit, minus
any fees. Make sure you choose a card that reports to all three credit bureaus.
#3: Make All of Your Payments On Time
After filing for bankruptcy, it is imperative that you start paying your
bills on time. Payment history makes up 35% of your credit score, so making
on-time payments is one of the easiest way to rebuild your credit. If
you have a tendency to fall behind on your bills, you should
create a monthly budget – and stick to it. Now is the time to break bad financial habits. Sticking to a budget will
also help you build up your savings.
#4: Pay Off Your Balance Every Month
You may have heard that carrying a balance is good for your credit score,
but that’s not necessarily true. If your credit score was damaged
when you filed for bankruptcy, credit bureaus want to see that you are
capable of repaying your debts. For this reason, you should get in the
habit of only spending what you are able to repay at the end of the month.
Paying off your balance each month is a good way to break the debt cycle.
Request Your Free Bankruptcy Consultation Today
If you have questions about bankruptcy, including how it could affect your
credit score, we encourage you to speak with a Dallas bankruptcy attorney
at Allmand Law Firm, PLLC. As the largest bankruptcy filing firm in the
state, we have helped thousands of people regain control of their finances.
Now, we are ready to assist you.
Call our office today to request your
free financial empowerment session!