Rebuilding Credit after Bankruptcy
The decision to file bankruptcy is a difficult one. For many individuals, it can feel as if they’ve decided to do something bad or even criminal. There may be feelings of guilt or failure. It doesn’t help matters that bankruptcy can damage one’s credit score. Rebuilding a credit score after bankruptcy can seem as daunting as paying off the debt that lead to bankruptcy in the first place. However, it is possible. Here are some tips to help rebuild a credit score after bankruptcy.
Tip 1: Know the Score
There’s no sense in trying to rebuild your credit score if you don’t know what your credit score is. There are many services, both paid and free, that can tell you what your credit score is. By law, you are entitled to one free credit report from each of the three major agencies; Equifax, Experian, and TransUnion; a year. You can go here ( https://www.annualcreditreport.com/index.action) to obtain your credit reports. In addition to knowing what your credit score is, you’ll want to closely go over your credit report to look for any errors or incorrect information.
Tip 2: Be Time Conscious
When it comes to bills, it pays to be time conscious. According Credit.com, payment history makes up 35 percent of your credit score, so paying your bills on time is one of the easiest ways to improve your credit score. If you tend to be forgetful, consider setting up electronic auto-pay wherever possible so that your payments will be automatically deducted from your account each month.
Tip 3: Don’t Jump to Conclusions
When going through bankruptcy, it may seem like a great idea to shut up shop (close all your accounts) and swear off credit cards; however, it can actually be damaging. “Closing accounts reduces the amount of credit you have available to you. This leads to lower credit scores,” reports Credit.com. Remember, just because you have a credit card doesn’t mean you have to use it. Just leave credit cards open to help keep your score up. If you did close your credit accounts, start applying for credit after your bankruptcy.
Tip 4: Beware of Quick Fixes
After your bankruptcy, you may hear about or be contacted by credit repair services. These services will tell you they can fix your damaged credit score. While these services aren’t necessarily a scam, you should investigate them thoroughly before signing up. They may have hidden or expensive fees. In addition, its vital that you remember there are no “quick fixes” when rebuilding your credit score.