Once you have filed for bankruptcy, everything is said and done. Now all you can do is keep your chin up, be hopeful, and start rebuilding your credit history. The very first step of this process is credit repair.
It is nearly impossible to get through bankruptcy with your credit intact. Even if you have been keeping up with all other payments and avoiding collections, your credit report will still suffer for possibly 7-10 years.
Here are a few ways with which you can offset the negative impact of bankruptcy on your credit report.
1) Ensure That Your Credit Report Accurately Reflects Your Bankruptcy
Although you may not want your bankruptcy to appear on your credit report, it is still better than displaying outstanding balances. Keep in mind that all your accounts that have been discharged through bankruptcy should say ‘discharged’ and show a $0 balance. Check your report regularly to find any errors in it. If the discharged accounts have been showing statuses like ‘active’ or ‘current’, immediately raise a flag with the credit reporting agency.
2) Keep Up With The Other Non-Bankruptcy Accounts
If you have other accounts that have not been included in the bankruptcy (such as student loans), they cannot be discharged. Such accounts will still be active and continue to impact your credit score. That’s why you need to make sure that you are paying down all other existing loans on time. Don’t forget to check other accounts that aren’t on your credit report, as they could eventually be reported if left unpaid.
3) Secure New Credits
Getting a new credit card after bankruptcy is definitely not easy. However, it is one of the most vital steps towards rebuilding your credit. Many credit card companies approve applicants with bankruptcy, knowing that it is impossible to declare bankruptcy again for another 7 years. In case you are not able to accrue any traditional card, you can consider applying for a secured credit card or loan. Secured credit cards require a security deposit that protects the lender in case you fail to make the payments. Issuers often convert a secured credit card into an unsecured card after the borrower makes timely payments for a year.
4) Ask Family And Friends To Step In
It is a good idea to have a co-signer once you start rebuilding your credit. You can ask a family member or a friend to co-sign with you, as it can help you get cards or loans faster. Having a co-signer will also help in re-establishing your credit much more quickly. Once you find a willing co-signer, make sure that you maintain a clean payment record. Keep in mind that if you are late in paying even a single payment, the information will reflect on the co-signer’s credit report as well.
5) Be Punctual With Your New Credit Card Payments
One of the fastest ways of rebuilding your credit score is making timely and positive payments. It doesn’t matter whether you have a secured card or an unsecured card, you need to make your payments on time every month. If it’s possible, pay your balance in full to keep yourself from getting into debt again.
6) Keep Your Balances Low
Those who have the best credit scores ensure that their credit balances are always low. Keeping your balances low is less about how much you pay off every month and more about how much you spend in the first place. Remember, a credit card issuer can report your balance at any time of the month. Hence, make sure that your total balance is never more than 30% of your credit card limit.
Also, make sure to create a budget to stay afloat in this financial crisis. If you need any other help or guidance in rebuilding your finances, our experts at Brian Walker Law Firm PC can help you. Contact us today at 360-695-8886.