Rebuilding Your Credit Post Bankruptcy The Right Way
If you’ve filed for bankruptcy or are in the middle of this process, you’ve already gone through a very difficult season in your financial life. You may be wondering just how to move on, but you may also be confused as to how to do that when your credit has been beaten up so badly by the ordeal of bankruptcy.
Chapter 7 bankruptcies wipe your financial slate completely clean, but it also stays on your credit report for 10 years and can send your credit score plummeting hundreds of points. In the future, you’ll need decent credit in order to rent an apartment, buy or lease a car, and much more. In general, you’ll need decent credit so you can move on with your financial life.
Consider a few of the following tips to help you get back on your feet after a bankruptcy.
Create a budget
At Scura Bankruptcy Law Firm, as a first step, we recommend creating a well-outlined and detailed budget. It’s important that you know exactly where all of your money is coming from and going to. It would be a good idea to limit the extras you used to spend money on so you can focus on getting back on track and stay in control of your spending.
Start saving for emergencies
Instead of spending money on things you don’t need and can’t afford, put your discretionary income into a savings account reserved just for emergencies instead. It’s a good goal to save up three to six months expenses, but even $1,000 in the bank kept only for serious situations can give you peace of mind and assurance that you’ll be able to afford minor setbacks without any issue.
Create a plan
In order to build your credit the right way, you need to know where you’re at currently. Check your credit report and credit score for free online and get an idea of where you are, and where you want to be. Take note of any discrepancies or inaccuracies in your credit report, as correcting these can make a huge, positive impact on your financial future.
Ways to prove that you are reliable to borrowers
There are a number of methods you can use to prove to lenders that you’re a reliable borrower that can be trusted to pay in full and on time. Set up a secured loan with a credit union or community bank. You may also be able to set up a secured credit card to help boost your credit score. The cards you may be eligible for may have high interest rates and annual fees but remember that this is just a starting point to get your credit back up to where you want it to be.
Pay on time, every time
The key to boosting your credit score is paying loan or credit card payments on time, every single month. This proves to lenders that you can be trusted to pay back money you owe and therefore are a low risk borrower. Keep your balances on the low end and make paying off your loans and credit cards on time a priority.
There are several tried and true ways to repair your credit score after you declare bankruptcy; it just takes some focused planning and intentional saving.
Written by John J Scura III, Esq.
Partner, Scura, Wigfield, Heyer, Stevens & Cammarota, LLP
John has been Certified by The Supreme Court of New Jersey as a Civil Trial Attorney. Whether it is a personal injury case, bankruptcy case, litigation case or other type of matter, John wants his clients to participate in the decision making process toward solving their problem in the best way possible.