Rebuilding Your Credit After Bankruptcy

If you are considering filing for bankruptcy, you should be aware that it will have a negative impact on your credit score. However, for many people their credit score is already damaged by late payments and defaults, so the impact of a bankruptcy filing is not that drastic. A Chapter 7 or Chapter 13 filing does not permanently destroy your credit rating. In fact, with time and dedication, you can rebuild your credit score.

If you are interested in restoring your credit rating, you should start work as soon as you receive your discharge order. Below are a few of the factors the credit reporting bureaus consider when calculating your credit rating:

• Your payment history is an indication of how you handle finances. Thus, it is important that you review your credit report every year to verify that it is accurate. If you discover any mistakes, you should immediately seek to have your report corrected.
• In order to improve your credit score, you must establish a credit history. If credit cards led to your bankruptcy filing, you should use caution when using credit cards post-bankruptcy. If you have old credit accounts that are still active, paid in full and sitting unused, do not close them. If you open new accounts, make sure you pay your bills on time and demonstrate you are being responsible with your credit card use.
• After you successfully complete your bankruptcy, you will likely emerge with the majority (if not all) of your debt being discharged or eliminated. If you have any remaining debt, you should make it a priority to pay it down.
• It is normal to have secured and unsecured credit. Secured credit includes your mortgage, vehicle loan, or any other loan that the lender has a lien on an asset as collateral. An unsecured loan does not have collateral pledged to the lender, such as medical bills or credit card debt. Whatever your situation, remember that the best strategy is to only use credit when it is necessary.

At The Law Office of Diane Anderson, our lawyer has been through a divorce, a bankruptcy, and faced estate planning and probate termination after her mother passed away at a young age. This kind of experience is unmatched by attorneys who have simply guided their clients through each process. Contact us today to schedule a comprehensive consultation.