One of the biggest worries many people have about filing for bankruptcy is that they won’t be able to get credit again. They worry that they’ll have this big, black mark on their credit history that will follow them for years and years, making it impossible for them to get a credit card or buy a house.
The truth is that bankruptcy in Gilbert will deal a blow to your credit, but any bankruptcy lawyer will tell you that you don’t have to wait the seven to 10 years that the bankruptcy stays on your credit report to get the credit you need. You can take steps immediately after your bankruptcy discharge to start rebuilding your credit quickly. Here are a few things you can do:
Information from your bank is reflected in your credit score. If you are constantly coasting just above zero, your credit score is going to plummet. But if you are sitting on $50,000 all the time, your score is going to rebound.
You aren’t going to have $50,000 in savings if you just filed for Gilbert bankruptcy, but anything you can save will boost your score over time. Save what you can each paycheck, even if it’s just a couple of dollars.
Get a Better-Paying Job
You probably think of your credit report of a list of accounts, followed by details on whether your payments were on time or not. While it’s true that your report consists mostly of that, it also include information about where you live and where you work. Your credit score also reflects your income.
If the ratio of your debts to your income is low, your credit score will rise. You can start helping your credit score – and your overall financial picture – by getting a better-paying job. Talk to your boss about getting a raise or a promotion, and shop for jobs if you can’t do that.
Pay Your Bills on Time
You may not be able to get new credit yet, but you likely still have a phone and car insurance. You may even have kept your house in the bankruptcy and are still paying a mortgage. All of these bills are reported to your credit, and if you are late on any payments, you will bring your score down even more. Ditto for your student loan and any other debt you weren’t able to discharge.
Every on-time payment will build a positive credit history that will slowly raise your score. Make sure you pay those bills on time, every time. It’s one of the best things you can do to restore your credit.
Keep Credit Applications to a Minimum
Every time you apply for a new line of credit, there is a hard inquiry on your credit report. But even getting pre-approved or just checking out rates can land a soft inquiry on your credit report. The more you have of either kind of inquiry can bring your score down fast. The more hard inquiries you have, the worse the damage.
Don’t apply for credit unless you are sure your credit is ready for you to get approved. Then keep your applications to one at a time, and space them out. Try for no more than one a month – if that.
Open a Small Credit Card
There are many credit cards available for those who have bad credit or who have a short credit history. These cards usually have a low limit in order to minimize the liability to the lender. You can open one of these cards to start showing a positive credit history without putting yourself at risk of racking up too much debt.
Apply for gas cards, store credit cards, and credit cards backed by a deposit in your bank. Stick with one card, and pay off the balance each month. Use this card only to build up your credit score – do not let yourself become dependent on credit and risk getting into financial trouble.
The best thing you can do to improve your credit is to be patient and consistent. Even one slip-up can set your credit score back a couple dozen points. But positive gains can be incremental. It might not seem like you’re making much progress, but in a year or less, you will significant improvement.
You need good credit to achieve financial freedom (unless you’re independently wealthy, which you are not if you just filed for bankruptcy). Credit allows you to get the best rates, and it offers you an option in times of emergency. You can rebuild your credit quickly after a bankruptcy by following these simple steps.
If you are currently struggling with debt, call Gilbert Bankruptcy Lawyers to learn how filing for bankruptcy may offer you the debt relief you need. We help you learn about Chapter 7 and Chapter 13 bankruptcy, and help you determine which would be right for you. We also represent business clients. Call us in Gilbert to talk to a bankruptcy lawyer today.
Gilbert Bankruptcy Lawyers