How to Improve Your Credit After Bankruptcy?
The process of bankruptcy is turbulent and affects the credit score for sure. However, it does not mean that you cannot later improve your credit. After undergoing a chapter 7 bankruptcy, your credit score will decline. However, the good news is that you can still improve your credit score. The fact of the filing of bankruptcy will be on your credit report for the next 10 years.
Before we talk about the ways to improve your credit, here are some information about chapter 7 bankruptcy. It is a tool rather a way to resolve crushing debts with the protection federal court.
With the federal protection and help of filing chapter 7 bankruptcy, you can get out of most of the unsecured debts. However, some recent income taxes, trust-fund taxes, student loans, child support, judgments based on fraud or violence, secured debts, etc. will not come under this.
Obviously, some lenders or credit-grantors will not be giving you a loan unless it’s secured and unless you show good income, and whatever assets you are left with. Each lender have their own conditions. So, how to reestablish credit after bankruptcy? You can do three primary things such as followings.
- Stay within your finances by creating and adhering to a budget
- Build a fund for emergency purposes
- Apply for a secured credit card or gas card
The current post will inform you about the ways you can rebuild your credit after bankruptcy.
Table of Contents
Keep an eye on your credit reports for any errors
According to statistics, nearly 25% of the US consumers found errors on the credit reports, which badly affect their credit score. If you check the report frequently, you will be able to identify the disputes and errors easily. You must make sure of the following things.
- All the dischargeable accounts should be reported as discharged which were discharged during bankruptcy
- All the discharged accounts balance should be zero
- The date of filing bankruptcy must be correct
If you find any error, dispute it immediately. Several tools are there to report that dispute. However, it is better to contact your lawyer before you file the dispute.
Try to get a secured or retail credit card
The saddest thing that bankruptcy does is to hurt the purchasing power. One can surely find it difficult but not impossible to qualify for credit cards. How soon after bankruptcy can I get a credit card? The answer is immediate. Here are three types of cards that you can get:
Secured credit cards: it requires a deposit in the bank before you apply for a card. In case you cannot pay the debt, the debt will be settled with the deposit that you made before. Generally, the credit limits is either equal to or lower than the deposit amount.
Retail cards: in most of the cases, these types of cards used to have lower requirements than of the unsecured cards. However, several cards used to have a higher interest rate and more penalty fees.
Gas cards: Oil companies are less stringent about granting credit because the amounts charged on credit cards are usually less than an average credit card.
Remember that whatever card you obtain does not matter. The thing that matters is the credit building goal. It is better not to take more loans than need. You must pay on time to avoid any penalties, and payment of interest.
Try to get a secured loan or a credit building loan
If you are still worried about how to improve credit after bankruptcy, then get a secured loan or a credit-building loan. The loans are designed to help you in improving your credit.
In this credit-building loan, the lender puts the loan amount in a saving account, and do not pay it up front. Once the payment is done the creditor can collect the cash. Generally, it happens after the completion of the loan term. If you are able to pay the loan amount at once, it directly helps in improving the credit.
In case of secured loans, it mostly works like a secured card. The loan is given against a property (collateral) whose value is equal to or higher than of the loan amount.
However, before you take the loan, you must ensure that you can repay the loan.
Ask someone to make you an authorized user on their credit card account
It simply means that your friend or someone who trusts you, adds you to their credit card account. It improves your credit. From the clean credit history of your friend, on-time payments will improve your credit. Moreover, your past credit history will not hurt their credit. The authorization entitles you to use the card but you are not responsible to make the payments.
However, if the primary account holder has a bad credit history, it will not help you. Therefore, be sure before you try this credit-building method that your credit is associated with someone who has good credit.
Concluding Words
In answer to the query of how to fix my credit after bankruptcy, here you can see the various ways to improve bad credit. However, in case of facing any bankruptcy, you must contact a lawyer who can file the petition in the bankruptcy court for you.
