Rebuild Your Credit After Bankruptcy: The Fast Method
Everyone knows that a bankruptcy doesn’t destroy your credit forever. The mark only stays on your credit report for up to 10 years. Even while the mark is on your credit report, appropriate financial activity can improve your credit score to the point where you won’t notice the negative effect anymore. No one wants to file for bankruptcy anymore than they want to wear a cast, get a flat tire in an unknown area of town or get a tooth pulled. Yet these things happen all the time to normal people just like you and me. Filing for bankruptcy is actually commonplace in America – just like breaking an arm, getting a flat tire or having a problem only a dentist can fix.
In 2013, 1,107,699 bankruptcies were filed in the U.S. (individual and business bankruptcies). No one’s going to argue when I assume that there weren’t very many of the 1,107,699 people involved in filing for bankruptcy last year that were excited to do so. It’s not anyone’s lifelong dream to file for Chapter 7 or even Chapter 13. But while no one is really eager to file for bankruptcy, we should all remember that filing for bankruptcy is not a financial death sentence.
The first step to believing that is to immediately turn to rebuilding your credit – fast.
We’re going to assume that you’ve all read previous discussions, here or elsewhere, regarding the way in which bankruptcy affects your credit score so we can skip right to the discussion on how to fix it.
The “Fast” Rebuilding Your Credit Score Method:
- Get a free copy of your credit report (each of the three major credit reporting agencies allows you to obtain a free copy once per year).
- Check the copy for errors.
- Determine your FICO score; make goals for improvement and work diligently to build your FICO score up each month.
- Pay your bills on time.
- Don’t spend more than you can afford.
- Get a credit card that reports to the credit reporting agencies.
- Spend some money on the credit card every month and pay the full balance every month (on time).
- Focus on responsibly paying back any loans that may have “survived” the bankruptcy (student loans or car loans for instance).
- Open a new checking and savings account to demonstrate financial stability and responsibility.
- If available, utilize automatic online bill pay to aid in making sure your payments are sent in a timely manner. On time payments are a major factor in good credit.
- In addition to a secured card, it may be a good idea to get a gas card or a retail card. They often cater to those with “not so perfect” credit and an on time payment history (i.e. paying the full balance every month) will have a positive impact on your credit score.
By following these rules, it’s possible to boost your credit score by 50-75 points in one or two years. It’s important to remember to be patient. While you can repair your credit score “fast” it’s not going to be immediate. The more actively you approach the reparation process and the sooner you get started down the road to financial recovery post-bankruptcy, the sooner you’ll arrive at your goals.
If you need more advice on how to repair your credit post-bankruptcy please get in touch with the southern California bankruptcy experts at Westgate Law.