How Can I Improve My Credit After Filing for Bankruptcy?

 Posted on March 06, 2023 in Bankruptcy

Filing for bankruptcy can be a difficult decision. Acknowledging that your debt has gotten out of control and that you need help to get your finances back on track is not always easy. However, bankruptcy can provide you with a truly fresh start. Eliminating your debts, including large credit card bills, medical bills, or other debts that have stacked up because of issues such as the loss of a job, can take away a huge burden and ensure that your family will be able to avoid serious financial problems in the years to come. Part of the fresh start following bankruptcy involves rebuilding your credit, which will help you qualify for loans or other benefits in the future. As you plan for your life after bankruptcy, there are steps you can take to improve your credit score.

Pay Your Bills On Time

One of the most important things you can do to rebuild your credit is to pay all of your bills before the monthly due date. In addition to making monthly payments on any loans you kept following your bankruptcy, such as a home mortgage or auto loan, you may want to set up reminders or automatic payments for other bills, such as utilities. Making prompt payments on a regular basis will show creditors that they can trust you and that you are responsible with money management—two qualities they look for when considering whether or not someone should receive loan approval. On the other hand, any late payments may cause your credit score to decrease further, affecting your ability to build your credit back up.

Get a Secured Credit Card

You may be hesitant to apply for a new credit card after filing for bankruptcy, since you will want to avoid racking up new debts that could cause future difficulties. However, credit cards can actually be beneficial in the long run if used responsibly. If you are unable to receive approval for a regular credit card because of the bankruptcy on your record, you may be able to receive a secured credit card. With this type of card, you must make an upfront deposit that serves as collateral for any purchases made with the card.

Opening one or two new accounts and using them sparingly while paying off the balance each month will demonstrate to potential creditors that you will be able to use and manage credit responsibly. It is also a good idea to select cards with low-interest rates and no annual fees, which will help you avoid accruing further debts.

Review Your Credit Report Regularly

It’s important to monitor your credit score closely, which will help you understand what actions are helping (or hindering) you as you rebuild your credit. Some credit cards or loan companies offer free access to your credit report, and by checking it regularly, you can keep an eye out for any changes or fluctuations in the data. Any unexpected dips in your credit score may indicate fraudulent activity, and if there are any errors or discrepancies on your credit report, then you can contact the reporting agency immediately so corrections can be made as soon as possible. You can also contact your bank or credit card company immediately to reverse fraudulent charges and ensure that no further damage will be done. Monitoring your progress allows you to celebrate victories like small increases in points. Seeing incremental progress can be very encouraging during this rebuilding process.

Contact Our Mecklenburg County Bankruptcy Attorney

Rebuilding your credit after filing for bankruptcy is not always easy, but with consistent effort and dedication, you can reap the benefits of your efforts. If you are considering bankruptcy and seeking relief from your debts, Blossom Law PLLC can advise you of your options. In addition to working with you to complete the bankruptcy process, we will help you understand the best steps to take to protect yourself in the future. Contact our Charlotte bankruptcy lawyer at 704-256-7766 to arrange a free consultation today.

Sources:

https://www.bankrate.com/personal-finance/debt/bankruptcy-timeline-rebuilding-credit/

https://www.nerdwallet.com/article/finance/rebuild-credit-after-bankruptcy

https://www.forbes.com/advisor/credit-score/rebuilding-credit-after-bankruptcy/