Rebuild your credit
Rebuilding your credit score after a bankruptcy discharge is a huge priority and concern for our clients. Now that you have successfully received a bankruptcy discharge, you are on your way to great financial success! You have a clean slate and an untarnished future to look forward to! Now that you have a brighter financial future to look forward to, it is time to start rebuilding your credit.
We need credit for things like car loans, credit cards, or good insurance rates. Your credit will not be blemished for long. Because a credit report can play a role in renting and financing, it is important that you consult with an experienced Arizona bankruptcy law attorney who can assist you in the post-bankruptcy credit rebuilding process.
To rebuild credit as quickly as possible, you need to use credit responsibly. It might seem nonsensical to use credit to build credit, but when you make payments on a debt, your creditors report these payments. If your credit report list your payment history, it will show that you are a responsible debtor. Potential new creditors will be able to see a track record that you have made continuous payments on time.
Just because you have a credit card, however, does not mean you automatically will earn good credit history. You need to use the credit responsibly: use it, pay it off when it is due.
In some cases, certain debts survive a bankruptcy and cannot be discharged. Student loans, or child support payments, for example, can be used to rebuild your credits if you make the payments in full and on time. You can increase your credit score and paint a positive picture of your financial abilities to be a responsible borrower.
Getting New Credit After Bankruptcy
You can obtain new credit, even if all of your debts were discharged by the bankruptcy court. There are many creditors out there that will offer credit cards (some with low limits) to those who have just declared bankruptcy. USE CAUTION, however, as some of these credit card offers may have a high interest rate / fees.
You can get a secured credit card ( credit card backed by a money deposit), so that your credit limit is the amount that you deposit (again, fees and interest rates may be high).
Use Credit Wisely
Do not spend more than you can afford. Spending up to the limit on the credit card does not mean you will get a higher credit score. Pay the monthly balance off in full, or at least make more than the minimum payment each month. Just as wise use of credit and credit cards will rebuild your credit, irresponsible use can have a negative impact on your credit. What you want to prove is that you can pay bak your debts when they are due. The following suggestions may help you to use credit in a responsible, wise way:
Make a budget. Stick to the budget.
After paying your necessary expenses, figure out what you can afford to pay every month on your debts. Write down every household expense, budget money towards the expense, and do not exceed that figure. (Don’t spend over grocery budget, for example, thinking you can let some payments “ride” without paying your debts this month).
Only borrow what you can afford to borrow.
Once you establish a budget, you will be able to identify what you can and cannot afford. Don’t use your credit card to purchase items that you would not be able to pay back within the budget allowance.
Set up automatic payments.
If you set up automatic payments, you won’t miss any. It can be easy to forget to make a payment; however, not if you arrange to have your bank to deduct payments from your account every month as they come due.
Review Your Credit Report.
The law entitles you one free credit report from each of the reporting bureaus each year. You may request a report online and you should review them to make sure they contain no mistakes, and if they are not accurate, fix it. Look for debts that you no longer owe that may be showing on the report. Give an eye to balances due that may be incorrect, or debts that are not yours. You can fie a dispute with the credit reporting agency if you find any incorrect items. The agency will then investigate and then make warranted corrections (you may have to provide documentation in order to dispute the report).