Tips For rebuilding your credit after bankruptcy
You’ve just received your bankruptcy discharge and are wondering what to do to rebuild your credit. Your credit score is very important because it is an indication to lenders of your credit worthiness. The following are some simple steps you can take to start rebuilding your credit after bankruptcy.
Review your credit report
After your bankruptcy discharge, you should request your credit report from all three credit bureaus, Experian, Transunion, and Equifax. You’re able to request all three credit reports free of charge once a year from this website. The debts that were included in your bankruptcy filing should appear as having a zero balance, or saying “discharged”, or some comparable description. It is a violation of the Fair Credit Reporting Act to list debts incorrectly, and you have the option to report errors in your credit report. Incorrectly reported debts may impact your credit adversely. Here you can read about your options if you need to dispute errors in your credit report. You should also contact your bankruptcy attorney for advice on rebuilding your credit after bankruptcy.
Pay Bills on Time
Now that bankruptcy has given you a clean slate you should start to work on improving your credit score. Most lenders will check your FICO score to determine if they will issue you credit and to determine the interest rate for that credit. You will improve your credit score just by paying your debts on time every month. According to an article by MyFico, the company who invented the FICO credit risk score, 35% of the FICO score is derived from your payment history. Therefore, your Payment history is one of the most important factors in your FICO score. One way to make sure you pay your bills on time is to set-up payment reminders or set-up automatic payments.
Apply for Credit
After the court orders your bankruptcy discharge, you will look like a more attractive applicant for credit. Your appeal to lenders increases because most of your liabilities have been eliminated or greatly reduced. The first step in obtaining new credit should be to apply for a secured credit card, this is a card that requires a cash deposit, which serves as cash collateral for the account. The bank, in turn, issues you a credit card with a credit line that’s 50% to 100% of the cash deposit. What’s great about this card is that, in most cases, the payment information is reported to the credit bureaus, and you will start to re-build your credit by re-establishing your payment reputation. In order to re-establish your reputation as a credit worthy borrower, you must borrow a reasonable amount each month, and make payments on time.
Speak to an experienced Maryland and Washington D.C. Bankruptcy attorney before filing for bankruptcy. A DC bankruptcy attorney will help you determine if bankruptcy is a good option for you depending on your individual circumstances.
A Washington D.C. bankruptcy attorney could give you advice on rebuilding your credit after bankruptcy. Ready learn more about the bankruptcy process? Call 202-445-4775 or contact us for a consultation.