How To Rebuild Your Credit After Bankruptcy
When struggling with overwhelming debt, filing for bankruptcy can help you start over financially. However, while bankruptcy gives you the relief of a clean financial slate, a bankruptcy filing can negatively impact your credit. The good news, however, is that the effect of bankruptcy on your credit is not permanent, and this effect fades with time. What’s more, there are several ways to improve your credit score as you wait for it to be taken off your credit report. The following are some of the steps you can take to rebuild your credit after bankruptcy.
- Monitor Your Credit Report and Score
The first step you should take if you are trying to rebuild your credit score after bankruptcy is monitoring your credit report and score. You can check your credit report on AnnualCreditReport.com. Accessing your credit report is free. By checking your credit report, you can understand what is lowering your credit score and make improvements. Also, you can spot any mistakes, such as inaccurate negative information, that are bringing your score down. If you spot any errors, report them and have them corrected.
- Consider a Secured Credit Card
An important step you can take to rebuild your credit after bankruptcy is to reduce your dependence on credit cards. However, a secured credit card and using the card responsibly can help you start repairing your trustworthiness in the eyes of lenders. A secured card can show responsible credit behavior. Secured credit cards generally function as traditional unsecured cards. However, the difference is that with a secured credit card, you need to put up collateral, which you then borrow against.
- Get a Credit-Builder Loan
With this loan, the creditor holds an amount of money in an interest-earning account in the borrower’s name. Then, the borrower makes monthly payments according to their loan terms until they repay the loan fully. Financial institutions report credit-builder loan payment activity to credit bureaus, which can help improve your credit score over time.
- Practice Responsible Credit Habits
Healthy credit habits are crucial if you are looking to rebuild your credit after bankruptcy. The following are some responsible credit habits to practice;
- Make consistent, on-time payments
- Reduce your credit card use
- Build an emergency savings fund
- Keep your credit balances low
- Become an Authorized User
This involves having a card in your name that is attached to another borrower’s account. Once someone adds you as an authorized user on their accounts, their credit history is added to your credit reports. This can have a positive impact on your credit score.
- Get a Co-Signer
To improve your chances of getting approved for a loan, consider utilizing a co-signer. A co-signer is an individual who takes up the responsibility of paying back the loan if you (the borrower) fail to do so.
Contact Our Deerfield Beach Bankruptcy Lawyer
Rebuilding your credit after bankruptcy is possible. For more tips on how to rebuild your credit after bankruptcy or if you need help with bankruptcy filing, contact our Deerfield Beach bankruptcy lawyer at the Law Office of Adam I. Skolnik, P.A.
