Ways to Rebuild Your Credit After Bankruptcy
Filing for bankruptcy is grueling enough, but when the dust has settled, your work has only begun. With your financial state stabilized for the time being, it is time to work hard to restore trust, rebuild your credit, and even start saving money for the future. These tips should help you figure out what your first steps toward recovery from bankruptcy should be.
1. Build a Budget. For many people, bankruptcy is the result of failing to plan. The way out of trouble is the exact opposite—build a budget that is realistic, workable, and detailed, and then stick to it no matter what. A common mistake is to plan major lifestyle changes (extreme frugality; canceling Internet service, etc.) that you really aren’t going to be able to continue long-term. Just make a few good changes, and make sure that your expenses don’t outnumber your income.
2. Seek Financial Counseling. Bankruptcy is a good time to admit that you need some help managing your money. It is easy to find experts who are willing to sit down with you and critique your financial habits. When you look at your situation, you might think you see everything clearly, but a more experienced mind can usually quickly spot a few areas in which you could be saving money.
3. Open a New Credit Card. Find a bank that will extend credit to you and make it a point to keep up with the account. You can explore getting a secured credit card, having someone co-sign the application, or ask to become an authorized user. Any positive activity will really help to combat the debt problems in your past.
4. Check Your Credit Report for Errors. Examine your credit reports to look for any mistakes, as creditors can make errors when reporting on debt you've paid off. You have enough trouble without erroneous items on your credit reports artificially lowering your credit score even further. Get professional help if necessary; find the mistakes, and dispute to have them removed.
5. Keep Up With Payments. Make sure you pay your balances on time every month and keep your debt-to-income ratio low to help boost your credit score. Paying more than the monthly minimum payment is also a great way to strengthen your credit.
What about companies that claim to be able to make my problems disappear?
If it sounds too good to be true, it probably is. A promise or guarantee is almost never legitimate.
How long will it take to see results?
Your credit score will start to look better after about a year, as long as you avoid hurting it any more.
Call Our Attorneys for Help
If you have any questions about your debts, a bankruptcy lawyer can give you legal advice, representation, and resources to find good counselors in your area.
The Law Office of Julio E. Portilla P.C., is always available to answer your questions. Feel free to contact us.