Rebuilding Your Credit After Bankruptcy
Most people are worried that filing for bankruptcy will do permanent damage to their credit scores. The truth is, what really does damage to credit is continued late payments, non-payments and taking on more debt. Bankruptcy is a long-term solution that allows you to regain control and start rebuilding credit quickly.
At Linda Bal & Associates, we want you to know that there is life after bankruptcy. By eliminating debt, you will be able to start building a responsible payment history. With your debt-to-income ratio back in check and with a steady income, you will see your credit rebound. In fact, many people find themselves eligible for a mortgage only two years after the completion of their bankruptcy.
Five Ways To Rebuild Your Credit After Bankruptcy
It is true that a Chapter 7 or Chapter 13 bankruptcy filing will appear on your credit report for seven-10 years. But remember, bankruptcy is designed to help you, not punish you. By developing responsible financial habits, you can show that you have learned from past mistakes and are now a much better credit risk. It is very rare that your credit score will be affected for the entire seven-10 years. Two years is more realistic.
After filing bankruptcy, there are steps you can begin taking immediately that will help improve your credit score in the long run. Some of these include:
- Opening a bank account: Opening a checking account and maintaining it are signs that you are in control of your finances. Opening a savings account and depositing money regularly will give you an emergency fund so you don’t have to use credit cards if something comes up.
- Avoiding high interest loans: Payday loans are notorious for high interest rates. If you miss a payment, the penalties and interest rate hikes can be severe.
- Applying for a secured credit card: Opening a credit card with a low limit that is tied to a savings account limits your spending and helps establish a pattern of payments.
- Making a budget: Add up the income you receive from all sources (your job, Social Security, a pension), then add up all your monthly payments. Are you paying for things you don’t need? By detailing where your money is going, you may be able to reduce expenses. Any money that doesn’t go to bills can be saved, rather than spent.
- Paying bills on time: Making your payments every month shows that you are taking responsibility. That is good for credit. It establishes the kind of regular payment history lenders want to see.
There are many more easy steps you can take to improve your credit score after bankruptcy. If done correctly, you will see your score improve rather quickly. With repaired credit, you will again be able to borrow money when you need it to meet your personal or professional goals.
Helping You Improve Your Credit
To learn more about how to repair your credit and get the fresh start you need, please call Linda Bal & Associates at 630-912-5970 or toll free at 800-599-2152. You can also contact our law firm online. Your initial lawyer consultation is free. We maintain offices in Itasca, Naperville, Algonquin and Rosemont (near O’Hare) for your convenience.