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Steps to Rebuild Credit After Bankruptcy

Most people turn to bankruptcy after several months or years of financial struggles. Likewise, after a bankruptcy filing it also takes time for individuals to rebuild their credit and get back on track financially. In addition to time, there are proactive steps people can take to improve their credit after a bankruptcy filing. These include monitoring credit reports, applying for new sources of credit and continuing to pay monthly bills on time.

Monitoring Credit Reports

As most people are aware, filing for bankruptcy will negatively impact a person’s credit score. After filing, however, it is still smart for individuals to periodically monitor their credit reports. People should check reports from each bureau (Experian, Equifax and Transunion) for outdated personal information, incorrect credit history or errors in currently active accounts. All debts that were discharged as part of the bankruptcy proceedings should reflect so in your report. Bureaus must respond or remove inaccuracies within 30 days of a request.

Applying for Credit Cards

To help improve credit scores and show creditworthiness again after filing for bankruptcy, individuals should apply for new sources of credit. Although credit cards issued after a bankruptcy may have higher interest rates, paying on time, paying balances off each month and staying within the limit can help to avoid paying interest and will steadily increase an individual’s credit rating. Secured credit cards, where a debtor’s deposit is used as collateral, may also be a good option to help rebuild credit.

Paying Monthly Bills

Credit cards are not the only way to rebuild credit after filing for bankruptcy. Since all payment history and debts owed factor into a debtor’s FICO score and credit rating, paying monthly bills before they are due helps people bounce back faster following bankruptcy. Keeping up with installment payments in particular, like car or mortgage payments, in addition to utility, phone and other monthly bills shows that individuals are demonstrating financial responsibility and creditworthiness, even with a bankruptcy in their history.

Getting Back on Track Financially

Time is one factor in improving credit after bankruptcy, but it is also helpful for debtors to actively monitor and work to improve their credit ratings by demonstrating their creditworthiness and maintaining current financial obligations.

If you are thinking about filing for bankruptcy, but have questions or concerns; contact a local bankruptcy attorney for advice. Although there are financial consequences for seeking Chapter 7 or Chapter 13 bankruptcy protection, there are many options for rebuilding your financial future after filing.

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