5 Ways You Can Repair Your Credit Score

Although bankruptcy has the potential to solve a lot of debt problems, it does harm your credit. This unfortunate side effect can make it harder for you to get back on your feet after bankruptcy. Thankfully, the effect of bankruptcy on your credit will not last forever.

There will be an indication on your credit report that you filed for bankruptcy for up to 10 years after your discharge. However, the effect of this notation decreases over time. You can also begin to rebuild your credit faster by using the following tips and suggestions.

  1.   Don’t Accept the First Credit Offer You See

After you go through bankruptcy, your debt to income ratio often looks a lot better than many of the average consumers. Lenders also know that you cannot go through bankruptcy again for at least eight years. These two factors make you an attractive borrower, but it is not a good idea to jump on the first credit card offer or other lending option. Instead, you may want to wait until your credit score is higher so you can get a better interest rate.

  1.   Re-Establish Your Budget

Your budget likely got a little topsy-turvy as you went through bankruptcy. Sit down and examine your income relative to your remaining debt obligations. If you have never had a budget before, this is a good time to start. However, even if you had an established budget before the bankruptcy, it will likely need some adjustments. Be sure to include an emergency savings fund in your budget to help avoid future financial crises.

  1.   Take a Look at Your Starting Point

It is a good idea to review your credit report, so you know where you are starting. If you have significant late payments before your bankruptcy, those late payments will remain on your credit report, even if you no longer owe those debts. Accounts that went into collections can stay on your credit report for up to seven years. Knowing where you start can help you develop a goal going forward. Keep in mind that there are no quick fixes to repairing your credit, and be wary of credit agencies that offer these types of services. You may be a prime target after your bankruptcy.

  1.   Keep Up with Current Payments

If you had credit accounts that survive your bankruptcy, such as student loans or mortgage loans, keep paying on these consistently to help rebuild your credit. Doing this shows your borrower that you only fell on hard times and that you are still a sound investment from their perspective. Missing these payments can only hurt your credit score.

  1.   Consider New Credit Avenues

You will still get credit card offers after your bankruptcy, but they may have high interest rates, hidden fees, and other penalties tacked on. Your limits also may not be very high. Read carefully before you agree to any new credit cards or lending options. You may also be able to get a secured credit card, which is backed by a monetary deposit. This type of credit card may also have high fees and interest rates as well, however. Gas cards and retail cards may also be a good option to help rebuild your credit quickly—just be sure to pay off the balance each month.

Restoring your credit after bankruptcy is not impossible, but it can be tricky. It takes time and conscious effort. You are essentially starting from scratch, which can be difficult. If you are considering bankruptcy, speaking with an attorney about it how will affect your credit in the long run may be a good idea. Call MaxwellDunn at (248) 809-1395 for more information.