Deciding whether to file for bankruptcy is tough. Although filing for bankruptcy offers many benefits, including the opportunity to repair your financial situation, it also has its downsides. One impact of filing for bankruptcy is that it can lower your credit score. Fortunately, however, it’s possible to rebuild your credit by taking certain actions. In this article, we discuss five tips for rebuilding credit after bankruptcy.
#1: Keep Up with Your Remaining Payments
Although bankruptcy will discharge much of your debt, there is a possibility that you still have some debt remaining. For example, bankruptcy doesn’t discharge alimony or student loan debt. Therefore, after bankruptcy, you first must determine which of your accounts are still open. Next, you must ensure that you make payments on all open accounts in full and on time. Doing so will help you begin rebuilding your credit.
#2: Apply for New Credit (But Keep Your Balances Low)
Although this may seem counterproductive, you should apply for new credit. Fortunately, there are several types of credit available to people who’ve filed for bankruptcy. In addition, you should strive to keep your balances low. Specifically, experts recommend that borrowers maintain a credit utilization ratio of under 30 percent.
#3: Keep Up with Your Payments for New Credit
Although opening new credit accounts can help you rebuild your credit after bankruptcy, failing to make payments on these new accounts can have the opposite effect. Therefore, it is imperative that you make timely payments on any new accounts you open. Ways to keep up with your payments include:
- Enroll in autopay
- Pay off your card(s) several times each month
- Set reminders to make payments
- Arrange your finances in a manner that allows you to pay off the full balance of each account every month
#4: Ensure Your Payments are Reported to the Credit Bureaus
Lenders and creditors don’t have to report your activity to the credit bureaus. However, you should request that they do so. Ideally, the creditors and lenders you establish accounts with after bankruptcy should report to all three credit bureaus. This will ensure that your positive payment activity is recorded and improves your credit.
#5: Check Your Credit Report
Finally, you should review your credit report after bankruptcy. Although bankruptcy is a public record on your credit, inaccuracies on your credit report, such as debt shown as late or active instead of discharged, can harm your credit further. If you find an error on your credit report, you should dispute it as soon as possible.
Contact a Dallas Bankruptcy Lawyer
At Toronjo & Prosser Law, we provide bankruptcy services to residents of the Dallas-Fort Worth community. We routinely represent clients in bankruptcy proceedings and have a reputation throughout Texas for providing dependable service and informed representation. If you are considering filing for bankruptcy, we will work closely with you to ensure the protection of your financial future. Contact us today to schedule a free consultation with a Dallas bankruptcy lawyer.