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Saturday, January 28, 2017

How can I improve my credit score after bankruptcy?

One of the biggest concerns we here from people when they are considering filing for bankruptcy is whether they will ever be able to borrow money again. For a lot of people considering bankruptcy, they’ve worked hard to build a great credit score and are reluctant to let that go despite their struggle to keep their heads above water. While it is definitely something to think about beforehand, just because you file for bankruptcy does not mean that you can never borrow money again. It is absolutely possible to rebuild your credit after filing for bankruptcy.

Here are some expert tips on how to rebuild your credit after filing for bankruptcy.

Working With a Budget

Before you file for bankruptcy, you will be required to take a credit-counseling course, which should help you to develop a workable budget given your income. Take this advice to heart and stick with it! There are a number of free budgeting apps out there that can help make the process less painful and maybe even a little fun.

Developing and sticking to a budget will help you put money where you want it to go, including your savings account, which is where our next step takes us.

Restock That Savings Account

For the next eight to twelve months after your bankruptcy is finalized, put a percentage of your income into a savings account and leave it there. If you have direct deposit and the ability to choose multiple accounts in which to deposit your check, allocate that percentage you want to go into savings and pay yourself first. This can help you make saving a priority and get that account growing.

Choose Creditors Wisely

After about a year of sticking to your budget and building a savings, start researching some good secured credit cards with terms you can live with. Using some of your savings you’ve accumulated, place a small amount on that secured card and purchase something each month and pay it off right away.

As you become more adept at working with your new credit, you can graduate up to one or two cards that are not secured, and keeping a small balance that you pay off within six months. This tactic will allow your credit score to increase as you continue to make timely payments.

Avoid payday lenders at all costs. These lenders leverage you with high interest rates that most people can never escape from.

If you have friends or family that are willing to be co-signors on a loan or card for you, this may enable you to contract with more reasonable creditors under better terms.

Keep Credit Balances Low

As you build your credit, a good rule of thumb is to keep your balances less than one-third of your credit. Even better, ensure that you always have more than enough money in the bank to pay off those balances.

Are You Considering Bankruptcy?

If you are struggling to meet your financial obligations and are thinking about bankruptcy, come talk to us. Our Miami Valley Bankruptcy attorneys can inform you about your options and help you determine your best course of action. Contact us today for a free consultation.


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Miami Valley Bankruptcy, Brian Lusardi, Esq., assists clients with Bankruptcy matters including but not limited to: Common Myths, Cost of Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, The New Bankruptcy Law and Personal Bankruptcy in Xenia, Ohio, and the cities of: Wilberforce, Alpha, Spring Valley, Dayton, Bellbrook, Yellow Springs, Cedarville, Fairborn and Clifton; and the counties of Greene and Montgomery.



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