How To Re-Establish Credit After Bankruptcy.

Many people are afraid to file bankruptcy because they feel they will never be able to have a good credit score again.  This is not true.  Let me explain…

The benefit of filing bankruptcy is that it eliminates your debts. Unfortunately, it also wipes your credit history as all accounts get closed and the information that you filed bankruptcy stays in your credit report for 10 years.  Re-establishing credit seems impossible.

Luckily, it’s much easier than you think!

If you own a car and kept the car through and after your bankruptcy that car payment is helping re-establish your credit.

If you are a home owner and kept your house then your house payment is also helping re-establish your credit.

If you have neither, what we recommend is to get a secured credit card.  Many banks will offer them. If not, there are many on line banks and financial institutions that offer credit cards to people after bankruptcy. Typically, they will charge a much higher interest rate and some may require and yearly fee.  Don’t worry.  Here’s how to make this work for you:

  1. Only charge one or two small things a month.  A tank of gas, Mickey Dee’s, something INEXPENSIVE that you can easily PAY OFF every month.
  2. Pay off the charge card every month.  Keep a 0 balance.  Always.
  3. You will be told carrying a balance is more beneficial.  The only one it benefits is the credit card companies.  They get interest for nothing.  I’d like to be paid for doing nothing J
  4. Use the credit card every month, Pay it off every month.  Within 6 months you will be getting credit card offers and your credit score will be much higher.
  5. HOWEVER!  DO NOT GET LOTS OF CREDIT CARDS. That actually will lower your score.  Part of your credit score is your income versus debt ratio. This means they will add up your credit limit on all the cards and count that as debt.  Even if you only have a small balance, they only consider the amount you COULD get in debt.  The more credit cards you have the more debt you COULD incur, the more debt you can incur the LOWER your credit score. Granted this is only one factor in your credit score, but it is a factor that will help you the most. 

You have already taken the first step to financial rebirth and peace of mind by deciding to file bankruptcy.  Once you have successfully completed your bankruptcy and gotten your discharge, please do not fall back into the old bad habits.  Enjoy financial freedom by knowing YOU control your finances, not your creditors!

We are here to help!  Call now to speak with an attorney and get some peace of mind, 248-439-0440 or 248-559-9529.

Conveniently located on 11 Mile just east of Woodward.  Our address is 1108 West 11 Mile Rd., Royal Oak, MI  48067