Declaring bankruptcy can be a difficult decision, but once the bankruptcy has been successfully discharged, debt that’s been burdening you will have been removed, giving you the opportunity to make a fresh start.
However, for many who successfully complete the bankruptcy process, there are lingering worries about how it will impact your credit score and ability to get a future loan. Without a doubt, bankruptcy will impact both. The good news is that even though your score may decrease, there are practical and common sense ways to improve it. It takes some time — and patience. But if you follow these rules for improving your credit score, you’ll likely emerge from bankruptcy in much better shape.
How Can I Improve My Credit Score After Bankruptcy?
Bankruptcy goes on your financial record, so financial agencies that provide loans, mortgages or credit cards will review your credit history and see it’s there. Bankruptcy can stay on your credit report for up to 10 years, and your credit score will probably be pretty low after a bankruptcy. However, you can legally get a loan after bankruptcy. It’s going to depend on different factors, including the steps you take to build your credit post-bankruptcy.
After your bankruptcy has been completed, you should check your credit score and know where it’s at. This gives you a better understanding of where you need to go in the future. You can check your credit report online through a service like Credit.com.
Here are some tips on proven ways to put your credit score on the right track.
Don’t Be Late Paying Bills
Paying your bills on time is a simple and effective way to improve your credit score. Up to 35% of your credit score will be made up of your payment history, so it truly is important to meet those deadlines. If possible, set up a system to have your payments made electronically and on time, a service that some banks and creditors offer.
Understand Your Limits
It’s fine to apply for a new credit card after bankruptcy has been discharged, so you have one in case of an emergency. The most likely card you can get approved for is a secured card, which requires a refundable security deposit before you can use it. Other options include subprime cards, which are designed for people with bad credit, or you can get a retail credit card from a retailer that you frequently shop at.
If you get one, remember to stick to the limits imposed on it. Keep your balances below those limits, which are likely to be very low because of your credit score. Just use the cards for emergencies or very sparingly, and keep paying them on time.
Apply for a Loan
Once you’ve been able to demonstrate that you can pay bills on time, keep a credit card without exceeding the limits, and show some financially responsible behavior, your next step should be to consider applying for a line of credit about a year to two years after your bankruptcy.
If you need a new car or something else that can be financed through a loan, go for it. Find a car or new furniture, etc., that’s affordable. If you do get approved for the loan, you’re likely to have a higher interest rate the first time around, although it helps not to jump at the first offer but to shop around first for the best rate. And at the same time, be wary of credit repair services which tend to have expensive fees for what they’re offering to do for you.
These tips allow you to repair your credit for free, without paying someone else to do so.
Check Your Credit Report Often
Along the way, it’s important to check your credit reports regularly for possible errors. Mistakes can be made on credit reports, and you want to quickly correct them. If you do find errors on your report, dispute them immediately.
And most importantly, you need to be patient. It can be a long climb up the ladder to repair your credit, and it won’t happen overnight. Following these tips is a good way to get started on that path to recovery.
Trust an Experienced Bankruptcy Attorney in Louisiana
When you’re considering this process, a good bankruptcy attorney can help you understand which approach to bankruptcy is going to work best for your situation, and how to best proceed afterward.
Orum Young Law has more than 35 years helping the people of Northeastern Louisiana file for bankruptcy and regain control of their finances. In those 35 years, we have filed more than 20,000 cases and experienced unbelievable success. We help our clients understand the basic aspects of their case, including how to determine their expenses and handle any necessary filings.
Contact us today at (318) 450-3192 to schedule your free case review and start protecting your family’s future.
