Bankruptcy has a significant impact on your credit. The overall impact will depend on the type of bankruptcy that is filed, but a bankruptcy generally imposes a harsh penalty on your credit score for 7-10 years. Due to the impact that a bankruptcy has on your credit score, it will be vital to take the proper steps to repair your credit after the bankruptcy has ended. Bankruptcies provide you with the opportunity to rebuild your life, which is why it is important to take the necessary steps to repair your credit after bankruptcy.
Carefully Monitor your Account Statuses and Credit Report
It is important to monitor your accounts carefully to prevent errors from further damaging your credit score. Each account on your report should say “discharged” or “included in bankruptcy.” If the status says anything different, there is likely an error that needs to be resolved. In addition to this, you will need to make sure that all of the balances are zeroed out, rather than stating any balance. You will want to monitor your credit closely during the time following your bankruptcy to ensure that the changes you are making are having a positive impact on your credit.
Get New Credit
The only way to build up your credit after bankruptcy is to get new credit. This can be rather difficult, especially as many credit applications may be rejected due to the bankruptcy. One option in this situation is to apply for a secured credit card. These cards require a security deposit. The credit limit is generally the amount of the deposit minus any relevant fees. In many cases, consistent, reliable payments will result in the company awarding you an unsecured credit card after a period of time. Retail cards are another option for building your credit, as they generally have less stringent credit requirements. Ensure that you make all of your new credit payments on time and keep the balance on your credit card below 30% of the credit limit.
Be patient when you attempt to rebuild your credit. It is a process that can take months and even years to complete. Bankruptcy has a significant impact on your life, which is why it is important to consult with a legal professional when you intend to file for bankruptcy. To learn more about bankruptcy and the impact it can have on your life, contact our experts at LeBaron & Jensen today!