A concern for many individuals filing for bankruptcy relief is rebuilding credit after bankruptcy. We have good news! There is life after bankruptcy. You can get rid of your debts and improve your credit score after bankruptcy. Just talk to a Georgia bankruptcy lawyer to find out how. Our lawyers can explain your debt-relief options, including the pros and cons of bankruptcy, during a consultation.
Five Ways to Improve Credit Scores After Bankruptcy
Filing a bankruptcy case rarely lowers your credit score. In most cases, individuals have already seen a drop in their credit scores because of late payments, debt collections, and other credit events. Filing for bankruptcy relief can put you on the path to improving credit scores.
Steps you can take after you complete your bankruptcy case to improve credit ratings include:
1. Review your credit reports
The first step is to review your credit reports for errors. You can obtain a free copy of your credit report every 12 months from each of the three major credit reporting agencies. It is a good idea to check your credit report each year for errors and mistakes. If you find an error, you need to report the error to the creditor and the credit reporting agency immediately. Continue to follow up with both companies until the error is corrected.
2. Make all future payments on time
One of the easiest ways to hurt your credit score is to make a late payment. Late payments count for 35% of your credit score. Always send payments to creditors within seven to 10 days before the due date to allow for problems with the mail or other issues that could result in a late payment.
3. Be careful with new credit
If you begin using credit accounts after bankruptcy, keep the balances on the account low by paying off the account each month. The amounts you owe count for 30% of your credit score. If you have many accounts or accounts that are maxed out, your credit score could suffer.
4. Should I get a secured credit card?
First, you do NOT need a credit card (secured or not) to rebuild your credit after bankruptcy. By filing bankrupcy you have already taken the first step to rebuilding your credit. It takes a little time to re-establish credit after completing a bankruptcy case. Usually, within 6 – 12 months you will see a dramatic increase in your score. If you absolutely feel like you have to have a credit card, begin with a secured credit card. A secured credit card requires a deposit, typically equal to your credit limit. The deposit guarantees the creditor receives a payment if you default on the account. When using the secured credit card, keep charges to one-half of the credit limit and pay the account in full in one to two months. Make sure that all payments are received by the creditor before the due date and that the creditor reports account information to all three credit reporting agencies.
5. Create a personal budget
It is difficult to manage your finances if you do not know how much money you have coming in each month and where that money is going each month. Creating a personal budget can help you manage your finances so that you can make credit payments on time and avoid financial mistakes that could hurt your credit score. The bankruptcy courses you were required to complete have useful information about creating and living within a budget. You can also find free and low-cost budgeting tools online through companies like Quicken, Mint, YNAB, and MVelopes.
Contact a Georgia Bankruptcy Attorney for More Information
If you are struggling to pay debts, a Chapter 7 or Chapter 13 bankruptcy case might be the best way for you to get rid of debt and get a fresh start. Do not let worries about credit scores keep you from learning how bankruptcy can help you get out of debt. Schedule a consult with an experienced Georgia bankruptcy attorney today for a free consultation to learn more about bankruptcy filings.
Posted in: Bankruptcy