How do I rebuild my credit after filing for bankruptcy?

There is a common myth that bankruptcy will permanently ruin your credit score. While bankruptcy can cause serious credit score damage, this damage is not irreparable. These steps can slowly rebuild your credit, and you will be able to get your financial life back on track with a little patience.

Quick Steps to Rebuild Credit After Bankruptcy

• To ensure accuracy, keep all accounts current. Also, make sure to regularly check your credit score and credit report.
• If you don’t already have a credit line, consider a secured credit card to help you rebuild your credit score.
• Do not take on any added loans or debts unless you are certain that the monthly payments, which include the higher interest you will pay with a bankruptcy filing on your record, are within your ability to pay.

Step-by-Step Guide for Rebuilding Credit after a Bankruptcy

1. Pay attention to your credit score

It is important to monitor your credit after bankruptcy. To track the impact of your efforts on credit, you can check your progress. Report any errors in your credit report. An error can cause your score to drop.

Your credit score may be lower than you would like until bankruptcy is discharged. You might notice a difference if you make prompt payments and keep your credit use low.

Discharged bankruptcy is not the same thing as bankruptcy that has been removed from your credit report. It will still have a negative impact on your credit report if it is there. You can still improve your credit score by lowering your debt and making regular, on-time payments.

2. Consider a Secured credit card or a Retail card.

What is the maximum time you must wait to get a credit card? You may not be eligible for traditional credit cards if you have many negative marks on your credit report or if you have an extremely low score. You might open a secured credit card or a retail credit card.

Before applying for a card, you should consult your attorney if you are currently in Chapter 13 bankruptcy. You can only take on certain types of credit or debt while you are in Chapter 13 bankruptcy’s repayment phase. The court might require you to obtain permission first.

Secured Credit Cards – To secure your original credit line, a secured credit card will require a deposit. A secured card’s credit limit is the amount of the deposit less any fees. If you deposit $300 on a secured credit card with an annual fee of $29, your credit limit is $271.

You can use your secured credit card to improve your credit score. However, you should only make small purchases. Also, pay your account on time each month. Your credit limit should not exceed 15%.

Choose a secured credit card that reports to all three major credit agencies. Your credit report will be enhanced by the reporting of your on-time payments, which can help you rebuild your credit.

Retail cards – Sometimes, department store cards and retail cards have much more lenient credit approval criteria. After several months of regular payments on a secured card, you may be eligible for a retail credit card. Retail cards generally are more expensive than secured cards, but you might qualify for a retail card once you have a few small monthly payments and good credit history.

3. Do not repeat past mistakes

Although you might believe that bankruptcy means a fresh start, this is not the case. You will not be better off if you do not learn from your mistakes. You need to be honest about your spending habits, budget and decide where you can cut back or practice better self-control.

4. Diversify your portfolio with a Credit Builder or Loan Account

A Self-Lender Credit Builder Account is another way to build your credit. You can get one for poor credit or none at all. This combination is basically a secured installment loan and a CD with a 12- to 24-month term. Instead of putting a considerable sum down on a CD, you open it in monthly installments. You cannot withdraw money from the CD until the end of its term.

A Self Lender Credit Builder Account requires you to pay an administration fee. You can also choose how much money you want to deposit each month. The account earns interest as a CD, and you pay interest as you would on a loan.

You won’t make any money from the CD because it earns interest at a lower level than what you paid for the loan. Self-Lender reports prompt all three credit bureaus to rebuild credit after bankruptcy.

It is not possible to improve your credit score by simply following the steps. You must also be responsible. Make your payments on time, avoid opening new credit lines that you don’t need, and make wise financial decisions.

Check out your Credit Report card to see a complete overview of your credit situation after bankruptcy. This supplies an overview of your credit score and allows you to track areas that are improving or not so you can figure out how best to rebuild your credit after bankruptcy. Most importantly: search for bankruptcy lawyers in Columbus, OH and get some solid advice and representation.