Finally your Chapter 7 bankruptcy is completed and now you can move on and start to build your credit again. This guide is a brief description of actions you or your attorney can take to rebuild your credit score after bankruptcy. Although it is true that bankruptcy can be listed on your credit report for up to 10 years, there are many steps you can immediately take to rebuild your credit score after bankruptcy.
The moment your bankruptcy case is closed, you can start rebuilding. You have to receive and use credit in order rebuild your credit score. However, you have to be cautious in order to avoid the same mistakes that may have forced you to file bankruptcy in the first place.
- Obtain a new credit card: It may be hard to qualify for a traditional unsecured credit card but there is hope. A secured credit card can help you rebuild your credit and at the same time allow you not to over spend. A secured credit card generally gives you a credit limit that is equal to the amount you deposit at the issuing bank. Eventually you will start to qualify for a normal unsecured credit card.
- Pay your bills on time: This may be a no brainier but remember paying your bills on time also helps you improve your credit score.
- Only use a small amount of your available credit: not more than 30% and pay it off every month.
- Do not apply for to much credit: Do not dive your self in and obtain a large amount of credit. Slowly rebuild your score and your credit will come. But remember, you have to obtain and use credit to increase your score.
Clean Up Your Credit Report
Many times credit reports still contain accounts that are open or overdue when in reality the obligation was wiped out as a result of the bankruptcy. You or your attorney will need to contact the lenders and the credit bureus to make sure that these accounts are reported as included in the bankruptcy. Also, look to see for any other inaccurate information.
If you have a student loan, mortgage or car loan paying more than the minimum and paying on time also can increase your credit score.
Many unforeseen events can effect personal finances, however planning may help prevent situations or events that forced you to file for bankruptcy in the first place. Here are few examples of financial planning that will help you:
- Make a budget: create a budget and stick to it. Look at your statements see how you have been spending your money and make changes if you find your self overspending.
- Create an emergency fund: As stated above many unforeseen events at no fault of your own can sky rocket your debt. Create a savings account for emergencies so you will not have to rely on credit when these events happen.
- Medical Bills: Medical bills are many times the reason people file for bankruptcy. If possible try to find employment that provides health insurance.
Immediately rebuilding your credit score and financial planning will help you after bankruptcy. The key is to stay persistent and pay attention to your expenses and you will have a better credit score before you know it. Call the Law Offices of Rami N. Nabi your local Orange County Bankruptcy Attorney if you have any questions regarding bankruptcy.