Rebuilding Your Credit After Bankruptcy

As a consumer who has filed for bankruptcy, the relief of being able to start fresh can give you a new outlook on life; no more calls from debt collectors, no more mounting bills to worry about being able to pay off.  However, the concern about rebuilding your credit and being able to get credit is a legitimate one.  A low credit score post bankruptcy is a reality however, rebuilding your score is not impossible.

Rebuilding Credit Takes Time

Rebuilding your credit involves a lot of hard work and a lot of patience.  A good credit score post bankruptcy is possible but takes time.  Poor credit can make it nearly impossible to get a loan and even when you are approved, your interest rates can be unreasonably high, making it difficult to keep up with payments.  Mapping out a time line to improve your credit is a great way to keep on track.

Receiving Your Credit Report and Credit Score

First, a few weeks after your bankruptcy is discharged, pull a copy of your credit report and credit score.  Under the Fair Credit Reporting Act (“FCRA”) you are entitled to one free copy of your report annually from each of the three major credit reporting agencies, Equifax, Experian and Trans Union.  You can request a copy at www.AnnualCreditReport.com.  If you have not already received a copy of your free report request one so that you know what is reporting.  Make sure all of your accounts are accurate and that there are no balances reported for any account that was discharged in your bankruptcy.   

Dealing with Inaccurate Credit Report Information

If any information on your report is inaccurate, you will need to dispute the information with the credit reporting agency.  The best way to dispute inaccuracies is to write a dispute letter and include supporting documentation.  Make sure to send your letter certified mail so that you have proof of when the credit reporting agency received it.  The agency has 30 days to conduct an investigation and respond to you with the results.  You will need to request a copy of your score separately.  The FCRA does not provide a free copy of your score.  Use your credit score as a starting point and set a goal for where you would like your score to be down the road.

Applying for and Using Credit

Depending on the state of your credit about one to three months after discharge, experts suggest applying for credit.  Applying for a credit card should be used as a means to rebuild your credit not as a means to spend money.  Applying for a major credit card like Visa, MasterCard, American Express or Discover can improve your score.  Make sure to use the card sparingly.  Try to never charge more to 15% to 20% of your credit limit and make sure to pay it off in full every month.  After you have reached 15% to 20% of your credit limit try only using a debit card or cash.  Part of your credit score is your debt to credit ratio so the lower you keep your debt, the higher your credit score will be.

Building Up Multiple Credit Accounts

Six months post bankruptcy discharge, if you have been successful in repaying your credit card debt and have been keeping your balances low, it is time to apply for a second credit card.  In an effort to build your credit score, experts say you should have at least five open positive accounts.  Avoid opening too many credit card accounts at the same time, as too many inquiries on your credit report can damage your score.

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Rebuilding your credit post bankruptcy can be done with dedication.  Learn from your experiences and spend your money appropriately.  If you believe your rights have been violated and you would like the advice or assistance of counsel, contact SmithMarco P.C. for a completely free case review.