Credit Repair After Bankruptcy: Rebuilding Your Finances
Bankruptcy is a last resort for any financially-conscious person, but for some, it is inevitable. The long-term damage of this credit blunder can last up to 10 years, resulting in the loss of a good credit score and future credit options. The road to credit repair after bankruptcy is a long one, but it isn’t hopeless. Lexington Law can help.
Find the Root of the Problem
The first step in rebuilding credit is to assess your situation. Why did you file for bankruptcy? There are several scenarios that could have led you to this point, including:
- Unpaid medical or legal fees
- Loss of employment
- Prevention of home foreclosure or home repossession
- Prevention of debt collector harassment
Consider your motivations carefully and think of ways to avoid the same mistakes in the future. While some circumstances are unavoidable, others like overspending can be easily dodged with smart planning.Lexington Law’s attorneys and paralegals have years of experience dealing with every credit repair issues, and are well-equipped to address credit repair problems occurring as a result of a bankruptcy filing.
If bankruptcy has allowed you to restructure debt, take time to determine how to handle your newly-established finances by improving your debt-to-income ratio. While bankruptcy cancels many debts, paying down any remaining credit cards or other revolving balances is imperative to improving your credit score. Tip: Pay more than the monthly minimum whenever possible; going the extra mile will help improve your credit more quickly.
Your efforts to fix your credit should be rewarded, and Lexington Law works with the credit bureaus to make sure of it.
A vital part of credit repair after bankruptcy is breaking old habits and starting new ones. There are several avenues to help you start fresh, including:
Applying for a secured credit card.
Although taking on new debt may seem counterintuitive, signing up for a clean line of credit is often actually a smart way to rebuild your score. Secured credit cards act as a debit account with credit benefits, requiring you to deposit cash before using the card (e.g., $1,000 deposit=$1,000 credit limit). Although you aren’t exactly using “credit,” your score is likely to see similar benefits. (Note: Not all banks report credit histories for secured cards to the credit bureaus. Before making application, ask your prospective card issuer if they do so.)
Reviewing your credit report.
Bankruptcy will seriously damage your credit report, of course, but many consumers may find examples of unfair credit reporting or outright inaccuracies as well. Similarly, an old bankruptcy shouldn’t linger on your report if the 10 year time frame has passed. If you spot an error in your credit report, don’t let complacency get the best of you. Lexington Law can often help remove bankruptcies from credit reports. In fact, we removed 429,163 bankruptcy trade lines in 2016 alone.
Opening an installment account.Installment accounts allow creditors to see your level of responsibility on a long-term basis. Taking on such small fixed-payment loans is a smart way to illustrate new habits. If you are able, consider investing in one of the following:
- A loan on a pre-owned car
- A home equity loan
- A federal student loan
- A long-term money vehicle, such as a CD or mutual fund
Our Credit Education section offers supportive tools to help you with the process. Our informed staff is always available to answer your questions as well.
Ask for Help
No one ever said credit repair after bankruptcy was easy. Sometimes, asking for help can make all the difference. If you are feeling hesitant about your own abilities, consider:
Finding a cosigner.
Many banks need reassurance when working with a bankruptcy-burdened credit history. If you are having trouble finding a lender, ask a friend or family member to cosign a loan or investment like the ones mentioned above. A financial back-up should alleviate your lender’s worries and help you secure the fresh start you need. Remember, though, to carefully repay any co-signed obligation, because you don’t want to ruin the credit of a loved one who only wanted to help you.
Consulting a professional.
In cases of bankruptcy, expertise can provide an elevated level of restoration. Credit repair firms specializing in consumer law, credit consulting, and bankruptcy removal may help you speed along the path to credit repair more rapidly. Lexington Law has over 25 years of experience helping clients understand and improve their finances. If you are looking for an affordable advocate, Lexington Law is a smart option.
Recovering from bankruptcy is difficult, but certainly not impossible. Practice perseverance, and take advantage of Lexington Law’s credit repair services along the way, and your credit problems may become a distant memory.