How Can I Improve my Credit Score After Bankruptcy?
One of the biggest concerns debtors have when filing a personal bankruptcy is how it will impact their credit score. Contrary to what most people believe, it does not destroy your credit forever. Once you have obtained your discharge of debt, you can immediately start rebuilding your credit score.
In order to restore your credit, it is essential to understand what the credit bureaus look for in calculating your score. A few examples of the factors the reporting agencies consider include:
- History of credit. Establishing your credit history is vital to your credit score. While it may seem counter-intuitive, you should consider keeping your old credit accounts alive. This is especially true if the credit card has been paid in full and is not being used.
- History of payments. You want to ensure that the payments you are making are being properly reported. It is important to review your credit report every year to verify that it is accurate. Any errors should be reported and immediately removed.
- Recent credit. It is vital that you demonstrate your commitment to taking your discharge seriously and pay your bills on time. You should keep only low balances on your credit cards.
- Types of credit. It is common for individuals to have both secured and unsecured credit accounts, but you should only use credit when necessary.
- Debt. After your bankruptcy case has concluded you will have discharged the majority, if not all, of your debt. If you have any remaining debt, paying it down should be a priority.
Filing bankruptcy to eliminate your overwhelming debt can be one of the wisest financial decisions you can make. With patience and hard work, you may be able to restore your credit score before you know it.
You will be inundated with mailers and offers to buy cars after filing for bankruptcy. Careful planning and selection of these offers will allow you to rebuild your credit without negating your fresh start.
An experienced Chapter 7 or Chapter 13 lawyer at Nielsen Law Group can help with all bankruptcy-related matters. You can schedule your initial consultation by calling (480) 888-7111 or submitting a web request here.