You may have heard that after filing for bankruptcy, you will never get credit again. Bankruptcy does damage your credit score in the beginning and stay on your credit report for at least 10 years, but you are not limited to a cash-only existence for the foreseeable future. The truth is that many people go on to successfully qualify for credit cards, mortgages, and loans after discharge. By demonstrating financial responsibility and following tips like those below, you can repair your credit after bankruptcy.
Tip No. 1: Keep Paying Non-Exempt Debts on Time
Not every debt can be included in a bankruptcy. Student loans, for example, are only dischargeable under special circumstances. Keeping payments on these accounts current will improve your score over time. You should also keep a positive payment history on any accounts not included on a credit report, because falling behind could result in a negative notation.
Tip No. 2: Fix Errors on Your Credit Report
An important part of credit repair is making sure that your credit report does not contain any errors. If you have not done so already, order a copy of your report and review all listed accounts. Errors should be disputed immediately.
You also want to confirm that your credit report accurately reflects your bankruptcy filing. Otherwise, the accounts you included will show outstanding and delinquent balances that hurt your score further. These can also be addressed via a dispute letter.
Tip No. 3: Get a New Credit Card
One of the most critical steps in rebuilding your credit is to obtain new credit. There are credit card issuers that approve discharged bankrupts, and even if you have no luck with any of them, you can get a secured credit card by placing a security deposit equal to your desired credit limit. If you pay the monthly bill on time for at least a year, the issuer may convert the card to an unsecured one.
Tip No. 4: Keep Your Credit Balances Low
Your current debt load is a major component in your credit score, so keep the balances on all of your credit cards low. Whenever possible, charge no more than 30% of your credit limit each month. In other words, if your card has a $2000 limit, avoid charging more than $600. Keeping the balance no higher than 10% is even better.
Tip No. 5: Go Slow with New Credit Applications
Another part of your credit score is based on how often you apply for new credit. Even if you’re being turned down, refrain from making several new credit card or loan applications in the same short time period, as lenders will assume that you’re desperate for credit and be justifiably wary.
Rebuilding your credit after bankruptcy will take time, so don’t rush and risk a mistake that could set you back even further. Although it could take years, achieving an excellent credit score is within your grasp.
If you have questions about the bankruptcy and credit repair process in Utah, contact Arnold, Wadsworth & Coggins today. We can help you stop the wage garnishments, foreclosures, and debt collector calls that can result from a difficult financial situation, and give you advice on how to create a better financial future.
Arnold, Wadsworth & Coggins Attorneys is a premier Utah law firm serving the Wasatch Front in the areas of family law, bankruptcy, criminal law, and civil litigation. Our attorneys provide clients with exceptional legal representation and personal attention. With over 35 years of trial practice and litigation experience, we bring big firm expertise at affordable rates
