Is Rebuilding Credit After Filing Bankruptcy Really a Thing?
Learn How You Can Rebuild Your Credit After Bankruptcy
You can absolutely re-establish your credit after filing bankruptcy. Bankruptcy is often the start of your pathway to rebuilding your creditworthiness, not a life sentence of bad credit.
At Financial Freedom Legal, we understand how important credit can be in accomplishing your long-term financial goals, such as buying a home or obtaining start-up funding for your small business.
So, here’s the tea on repairing your credit after bankruptcy filing!
1. New Credit
Obtaining a secured credit card can be an excellent way to begin re-establishing your credit. Establishing a secured credit card or other new lines of credit gives you an opportunity to show that you can use credit responsibly and make your payments on time.
It is often less difficult to get approved for a secured credit card than an unsecured credit card after filing for bankruptcy. Generally, a secured credit card requires that you pay a deposit that is equal or similar to the amount of the line of credit.
For example, you may be required to pay a deposit of $300 for a credit card that has a credit limit of $300. The deposit would be held by the credit card company and could be applied to any balance that you owe in the event that payment is not made. This minimizes the risk to the creditor, and also makes it easier for you to obtain approval.
Be sure to use your secured credit card or other new line of credit each month. Do not use more than 30% of the available credit.
For example, if your credit card has a $300 limit, make sure that your balance never exceeds $90.
Also, do your best to pay off the full balance each month and try to avoid carrying a balance from one month to the next as a good credit habit.
2. Vehicle Financing
Financing a vehicle can help with rebuilding your credit.
If you are in need of a vehicle after filing bankruptcy, obtaining a vehicle loan can be a great way to demonstrate your credit worthiness. Be sure to make all of the payments on-time.
Also, if you are in an active chapter 13 bankruptcy case, be sure to communicate with your bankruptcy attorney before moving forward with the purchase.
3. Monitor your credit reports
As you work towards re-establishing your credit, be sure to regularly monitor the information being reported on your credit report including your credit score.
Credit monitoring will help you catch any inaccurate information and avoid being surprised by false or derogatory reporting when you are financing a major purchase.
You can access a copy of your free credit report from all three major credit bureaus (Equifax, Experian, and TransUnion) one time each year by visiting annualcreditreport.com.
During the COVID-19 pandemic, annualcreditreport.com has increased availability to free credit reports, allowing you to access them online once per week through the end of 2023.
4. Our Commitment
Financial Freedom Legal is your partner on your road to financial freedom.
We recognize that rebuilding credit after bankruptcy is a major part of that journey. We can answer your questions regarding rebuilding your credit, provide you with guidance along the way, and do everything in our power to help you reach your credit goals.
Please do not hesitate to contact us for additional information about this week’s Bankruptcy Tea with Steve and Vee. We can be reached anytime at 804-FREEDOM! We would love to hear from you!
