Many individuals believe that bankruptcy will ruin your credit. While your credit will take a hit once you file for bankruptcy, one must examine their financial situation and determine what is worse: taking a moderate decline in credit in order to reset their debts or to continue to suffer credit blemishes as a result of late payments, foreclosures or repossessions, maxed out credit cards, and items in collections. If you’re having a tough time deciding, then a certified debt relief counselor or bankruptcy attorney will be able to expertly assess your situation and advise you accordingly.
If you have made the noble step to improve credit and your financial outlook by declaring bankruptcy, you have already made the first step towards improving your credit: getting your financial house in order. In order to have an idea of where you want your credit score to be after bankruptcy you have to know where you are at today, and that means taking account of your credit report and credit score today. You can obtain a free copy of your credit report once a year from the 3 credit reporting agencies Equifax, Experian, and TransUnion. Once you have reviewed your credit report, it will be time to make sure that you clear up any mistakes or discrepancies you find there. You can also use the free online service CreditKarma.com to view your score, receive updates, and even shop credit card offers based on your score.
Whether you have filed for Chapter 7 or Chapter 13 bankruptcy, once your case is discharged, the most important step towards improving your credit is to make payments on time, every time. Payment history has a very high impact on your credit score, so even one missed payment can usurp your efforts to improve your credit.
Initially, it may be difficult to find a new credit card company willing to extend credit. While credit cards can be detrimental to your improving credit score if not paid on time, on time payments can do the opposite and serve as a huge boost to your credit. Shop around for and consider obtaining a secured credit card that you can use to make small purchases whose balance can definitely be paid back at the end of the month.
There are a number of other small, methodical things one can do to improve credit after your bankruptcy and by being observant and careful, one can slowly but surely increase their credit score to pre-bankruptcy numbers and beyond. By enlisting the assistance of a lawyer specializing in bankruptcy, you’ll have access to their many years of helping debtors through the same process of debt recovery.