Your bankruptcy has been discharged and now you want to rebuild your credit. But what do you do? There are several things you can do to rebuild your credit after bankruptcy. Your credit goes up more slowly than it goes down so don’t be discouraged! If you need to file bankruptcy you can contact us here
Make on time payments
Focus on making payments on your existing accounts such as any reaffirmed debt, student loans, or lease payments. According to Credit Karma “your payment history is one of the most important credit scoring factors and can have the biggest impact on your scores.”
Check on your credit report
If you are trying to repair your credit after your bankruptcy you can start with getting your credit report. At annualcreditreport.com you can get a free copy of your credit reports from Transunion, Equifax, and Experian once a year. Currently due to the COVID-19 pandemic, Annual Credit Report is offering free credit reports every week through April 20, 2022.
You can look for errors and confirm that that your bankruptcy has come off your credit report when it is supposed to. If it doesn’t you will be able to contact the credit reporting agency sooner rather than later.
Become an authorized user
You can ask a family member to add you as an authorized user on their credit card. That way you don’t necessarily have to have the credit card but that person’s payment history will show up on your credit report. While this isn’t as impactful as other methods of increasing a credit score, it can still be helpful as part of a larger strategy overall.
Be smart when applying for new credit
You will get applications for new credit cards in the mail most likely while you are still in your bankruptcy. But each time you have a hard credit inquiry on your credit report – which comes from new credit applications – your score can be lowered. Plus, too many hard credit inquiries in a short period of time can be a red flag to other lenders.
Don’t apply for everything. You don’t even need to apply for anything. Take your time and think about what you want and even if you want to have a credit card again.
Pay off your credit card every month OR keep your balance low
When you do get ONE credit card – the idea is to not get overwhelmed – pay off that card each month. Or keep the balance low. However, if you pay off the credit card every month and you have no balance to carry over there isn’t the worry about how you’re going to pay it off.
The best way to think of this credit card is for buying gas. This credit card is only for buying gas and you pay it off every month. This will help your credit since it shows a good payment history.
- Make sure to have the payments set up in autopay
- Set reminders or have an email sent reminding you about the payment
- Set up your finances to assist you in paying off the balance each month along with the rest of your bills.
If you had a reaffirmation agreement during your bankruptcy
If you reaffirmed one of your debts during your bankruptcy be sure to make those payments on time – or even early. While car loan lenders may not report the payments to the credit bureau if there wasn’t a reaffirmation agreement you might still be able to use your payment history (keep the proof of your payments) as credit worthiness later.
Set up a budget
When you plan out your expenses and how much you can spend on fun stuff you will better control your spending or have a better idea of where your money is going. You can do this using paper and pen, a spreadsheet such a excel or google sheets, or an app.
There are several apps that are free or cost very little.
- Mint – free, $0.99 ad free
- NerdWallet – free
- Cash Flow Planner – free
- Cleo – free
- You Need A Budget – 1 month free, $11.99/mo or $83.99/yr
- Simplifi: Budgeting and Savings – $3.99/mo or $35.99/yr
Build an emergency fund into your budget
You want to make sure you budget some money to go into a savings that could cover an emergency. This will help you build a little safety net in case something goes wrong. Something like the car breaking or something in the house needing to be repaired or you have an unexpected medical bill. If you have savings you won’t be putting these things on a credit card or getting a loan.
Consult with Royal Oak Bankruptcy Lawyer for your bankruptcy needs at (248) 439-0440