How to Rebuild Credit After Bankruptcy

How to Rebuild Credit After Bankruptcy

After you file bankruptcy your credit score initially takes a negative turn as there are many debts that were not getting paid and getting reported as delinquent. In addition to this bankruptcy can be reported on your credit report for up to 10 years. Filing a Chapter 7 bankruptcy wipes out all your debt it does not clean up your credit report. There are steps that need to be taken to ensure that your credit score is restored. In some extreme cases, filing bankruptcy can lower your credit score as much as 240 points. I have listed a few tips that will help you rebuild credit after bankruptcy.

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Get copies of your credit reports from all three credit bureaus; Experian, Transunion, and Equifax. You are entitled to one free credit report yearly; you may acquire all three from Annual Credit Report at https://www.annualcreditreport…. You may also get all three credit reports from MyFico.com and Credit Sesame. Check out my review for MyFico.com by clicking here. You can also click here for my Credit Sesame review.

MyFico.com has a credit monitoring service with alert settings that notify you of any changes to your credit reports the instant that they happen and can be sent by text to your phone or email.

Credit Sesame also has free credit scores, free credit monitoring, and free identity protection. After you get your credit reports, review them for any errors; incorrect names and addresses,  or accounts not belonging to you.

Ensure that the accounts that were included in the bankruptcy filing are not present.

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Dispute Inaccurate Information

If there are errors that need to be disputed on your credit reports, you need to do so with all three credit bureaus. To dispute any inaccurate information you must send in a dispute letter, you can use this template on the FTC (Federal Trade Commission) website https://www.consumer.ftc.gov/articles/0384-sample-letter-disputing-errors-your-credit-report .

Make sure you keep a copySeal of the Federal Trade Commission of the United States of America for yourself and send this letter to the recipient by certified mail with a return receipt request; this way you have proof that the creditor has received your correspondence and you have a date of receipt on record.

The creditor has 30 days to respond. If you don’t hear from them the credit bureau will be forced to remove the item(s) from your credit reports.

Open a Secured Credit Card Account

A quick and easy way to get a boost to your credit score after your bankruptcy is discharged is to open a secured credit card account. The process is very simple.

All you need to do is go to the bank or credit card company of your choice and complete an application for a secured credit card account. Next, you will need to make a deposit into an account that is specifically for the credit card balance.

The credit line that you receive is usually 50% to 100% of the initial deposit. I strongly suggest that you choose a credit card company that will make your credit line equal to the amount of your deposit.

Secured credit cards are like traditional credit cards in that they also charge interest on the existing balance. The interest rate can range from 15% to 23%. There is also an annual fee and in some cases an application and processingsecured credit cards fee.

You will want to compare rates and fees prior to making your decision on which credit card company to get your card with. A great place to do this is at CreditCards.com.

CreditCards.com has options for many types of credit cards and you can compare them by the benefits they provide. There is also a side-by-side comparison tool, so you can weigh the pros and cons of each credit card’s features.

Most importantly, you need to make sure that the credit card company reports your credit limits and payments to all 3 major credit card bureaus; Experian, Equifax, and Transunion. Also, make sure that the credit card that you choose doesn’t report that the card is secured and offers periodic credit limit increases.

Pay your bills on time

It goes without saying that paying your bills on time has a high impact on your credit score. Your payment history accounts for 35% of your credit score. Even one late payment can have a drastic impact on your credit score sopay your bills here ensure that your payments are all made on time.

Following these few steps will help you to restore your credit after you have filed your bankruptcy. Don’t forget to create a budget and stick to it. You need your bills to be paid on time to keep your credit score points from decreasing. These steps are relatively easy and can be done on your own. No attorney is needed. If you have any further questions or you need clarification of any kind, please feel free to email me at shwana@yourcreditrestoredfast.com or you may comment below. Good luck!

4 thoughts to “How to Rebuild Credit After Bankruptcy”

  1. Great tips on rebuilding your credit after bankruptcy, many people are forced into claiming bankruptcy today out of no fault of their own with many companies closing their doors many people are out of work and are forced to claim bankruptcy.

    Shame it takes so much longer to rebuild your credit than to ruin your credit, just one outstanding debt can ruin a person’s credit which really does not seem fair.

    1. It isn’t fair that one debt has so much power when it comes to your credit report, unfortunately it does. Bankruptcy as an option should be considered carefully because of the length of time that it takes to drop off of the credit report. You would think that with all of the debts being removed that the consumer would not be penalized for 10 years afterwards. Hopefully this changes one day. However, my fiancee claimed bankruptcy and immediately afterwards he started receiving auto offers almost daily. It’s as if they can’t wait to get you back into debt. 

      It does seem as if it is much easier to ruin your credit than it takes to repair it. Rebuilding your credit takes dedication, patience and diligence.

  2. I never knew that an individual could file for bankruptcy. I always thought you had to have your own business. However, in your opinion, is filing for bankruptcy worse than closing an account or getting a repo on on your credit?

    I ask because I used to work in the car business and of course, people had all different types of credit scores but I had 2 people get approved with 2 repos on their credit and I couldn’t understand how.

    1. Thank you for the feedback Gabe. Yes, individuals can file bankruptcy, you do not have to be a business owner to do so.

      Filing bankruptcy is different from closing an account on your credit file or getting a repossession. None of the above are good for your credit, however they do not have the same impact.

      The point of the Bankruptcy is get rid of debt on your credit report. It will negatively impact your credit initially, however, after it is discharged the bad debts are removed from your credit reports.

      Closing accounts is not advisable, part of your credit score is weighted by the age of your credit file as well as the type of accounts on your credit file. So that really depends on what kind of account you are talking about.

      Repossessions are always a negative thing. They hurt your credit.

      If you are curious about your credit score you can always pull and monitor all 3 credit reports at MyFico.com, click here for my review.

      If you have any further questions, feel free to ask.

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