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Thursday, March 5, 2015

Life After Bankruptcy -How to Rebuild Your Credit

If you are thinking of filing for bankruptcy, you might be deterred by the devastating effects it can have on your credit score.  It is true that filing for bankruptcy can negatively impact your credit for the ten years that it is noted on your credit report. Luckily, you are not totally helpless as you can take steps to rebuild your credit after you have received your final bankruptcy discharge.

Knowledge is power!  Meaning that in order to have control over rebuilding your credit you must be informed about the things that are affecting it.  After your bankruptcy discharge date, or when your bankruptcy is finalized, you should get copies of your credit reports.  You can request copies from all three agencies, Equifax, Experian and TransUnion, in order to have the most complete information.  You should review these reports carefully in order to identify what is negatively affecting your credit and look for any mistakes.  If you find anything that is incorrect you should contact the agency to let them know and dispute the matter if necessary.

Another step you can take to rebuild your credit is to get a new credit card.  Most likely you will not qualify for a conventional card, but you probably will not have trouble getting a secured card.  A secured card is one in which you make a deposit to collateralize your line of credit.  If you do not pay your bill, the deposit is there for the company to seize.  The amount of your deposit will determine your line of credit.  You should only make small purchases with this card and should only use a small amount of the credit line.  It is also extremely important that you make on-time payments and pay off the entire balance each month.  If you do well with a secured card, you might qualify for a retail card within a few months.  These cards should be used the same way.

It is particularly important to pay your bills on-time when you are trying to rebuild your credit after bankruptcy.  If you can pay your bills early, you should do so.  Paying on time has a huge affect on your credit score and is one of the easiest ways to re-establish good credit.  Having a cash reserve is always a good idea as it can prevent you from relying on credit cards if you ever encounter an emergency.  Call us for a consultation.

 


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