While filing for bankruptcy can harm your credit, it does not have to last forever. A person can take steps to help re-establish their credit after filing for bankruptcy. At Martin Law Firm, P.L., our attorneys not only walk you through the bankruptcy process but can also advise you on the steps you can take to improve your credit score. Following are some tips on how to increase your score and therefore increase your buying power.
#1 Obtain a Secured Credit Card
A secured credit card is different from a regular, unsecured credit card. A secured credit card is obtained by placing a cash deposit with the lender, thereby ensuring your future card purchases. When your favorable payment history is then reported to the credit agencies, your credit score is positively affected.
#2 Obtain A Credit Builder Loan
A credit builder loan occurs when a lender places a certain sum of money in a certificate of deposit or in a savings account in the borrower’s name. The borrower then makes payments (including interest) until the loan is repaid. These loans can go a long way to rebuilding the borrower’s credit.
#3 Frequently Monitor Your Credit Report
Repairing and increasing a credit score involves monitoring the credit report regularly to ensure that its information is correct. Unfortunately, credit reports often contain errors and may incorrectly report the outcome of the bankruptcy. For example, the credit report may fail to state that certain accounts have been discharged and have a $0 balance.
#4 Start Small & Create A Savings Account (Emergency Fund)
Having a savings account can help a person that has finished bankruptcy to re-establish their ability to handle their finances, especially when the unexpected occurs. Placing 10% of income in a savings account is a good rule of thumb.
#5 Become An Authorized User
If a borrower can become an authorized user on someone else’s account, it can help to build their credit. An authorized user obtains a card with their name on it that is attached to an account belonging to someone else. As long as the payments are timely made, the authorized user’s credit score can increase.
#6 Request That On-Time Payments Be Reported to Credit Agencies
Not all lenders report payments to the credit bureaus. If a borrower is paying their debts on time and trying to rebuild credit, it is best to ask the lender to report their payment history to the credit agencies.
Speak With An Experienced Bankruptcy Attorney at Martin Law Firm, P.L.
If you are facing financial distress, contact our office to learn how we can help you with a new start. We are experienced with every step of the bankruptcy process and can provide you with the support you need.