Did you file bankruptcy recently? If so, you probably want to rebuild your credit as soon as possible. Though it can be challenging to rebuild your credit, our lawyers are ready to help you understand the process and the tips for rebuilding credit after bankruptcy.
In This Article
- What Are the Tips for Rebuilding Your Credit?
- Why Is My Credit Score Important?
- What Constitutes a Credit Score?
- Can You Get Credit After Bankruptcy?
- How Long Does It Take to Rebuild Credit After Chapter 7 Bankruptcy?
- How Long Does It Take to Rebuild Your Credit After Chapter 13 Bankruptcy?
- A Bankruptcy Lawyer Can Help You Rebuild Your Credit After Bankruptcy
What Are the Tips for Rebuilding Your Credit?
Your credit score begins to climb with each favorable note on your report. With a better crest score, you’ll be able to enjoy loans and mortgages. Here are five tips for building your credit history after bankruptcy:
Keep Up With Payments on Existing Loans and Credit Cards
The best way to rebuild your credit after bankruptcy is by making timely payments on existing loans and credit cards.
The more you pay on time, the less likely lenders will reject your application for new credit. If you don’t make payments on time, lenders may report late payments to the major credit bureaus. In addition, late fees are common when applying for new credit cards or loans.
Avoid Job Hopping
Job hopping doesn’t directly damage your credit score, but it can significantly impact a lender’s perception of you. They need to know that you have a steady source of income and that you will be able to pay back the loan.
A lender will scrutinize an applicant’s credit or loan application based on various characteristics, including their employment history, income over a particular period, and credit score. A steady job can inspire the lender’s faith in your ability to repay the debt.
Apply for New Credit
You’ll want to consider applying for a limited number of new credit card and other loan products as soon as possible after you file your bankruptcy. Although it’s usually harder to get new credit after a Chapter 13 or Chapter 7 bankruptcy, you have the opportunity to rebuild your credit, so don’t get discouraged if you don’t get approved right away.
Become an Authorized User on an Account
You can become an authorized user on someone’s credit card to help rebuild your credit score. Their positive account history and on-time payments help strengthen your credit, but your personal credit history won’t harm the account holder in the process.
The primary cardholder must be current on their payments and not have any past due accounts. If they’re delinquent in payments, they could risk losing their eligibility. Although you may use the credit card in your name, you will not be legally obligated to pay off the balance.
Keep a Close Eye on Your Credit Reports and Credit Scores
Once your financial situation has improved after a bankruptcy discharge, it’s important to keep track of both your debt and financial health. Regularly check your credit reports for errors and updates from the three major reporting agencies (Experian, Equifax, and TransUnion).
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Why Is My Credit Score Important?
Your credit score represents your financial history. Lenders use it to evaluate your ability to pay back debt. The higher your credit score, the more likely you will be approved for loans and other types of credit. Credit scores can also affect your ability to rent a home or apartment and even obtain jobs that require credit checks.
What Constitutes a Credit Score?
Several factors affect your credit score:
- Payment history
- Credit utilization rate
- Length of credit history
- Amounts owed
- Types of credit used
- New credit inquiries
Can You Get Credit After Bankruptcy?
There are still ways to get credit after bankruptcy, though finding a lender who will give you a good deal may be more challenging. You could get credit in the following ways:
- Car financing
- Conventional mortgage
- FHA-insured mortgage
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How Long Does It Take to Rebuild Credit After Chapter 7 Bankruptcy?
Chapter 7 bankruptcy stays on your report for ten years, but it’s likely that after two or three years, you’ll start to see an improvement in your score. When you file for bankruptcy, your debt-to-income ratio (DTI) starts to reduce immediately. Though it may take time to see that improvement, you are on the way to better financial health after bankruptcy.
How Long Does It Take to Rebuild Your Credit After Chapter 13 Bankruptcy?
Chapter 13 bankruptcy remains on a consumer’s credit report for only seven years after the discharge. For Chapter 13, it often takes 12 to 18 months to start rebuilding your credit score. However, after 18 months, many debtors can refinance or restructure debt.
A Bankruptcy Lawyer Can Help You Rebuild Your Credit After Bankruptcy
Bankruptcy can be a very overwhelming and confusing process. The last thing you need is to be filled with fear, anxiety, and doubt. Bankruptcy is not the end of the world, and it’s not permanent. Like most bankruptcy filers, you can return to a solid financial footing in a few years.
Hiring a bankruptcy lawyer will ensure you are well informed about the best tips for rebuilding credit after a bankruptcy. In addition, a debt relief attorney understands the rules governing bankruptcy filings and can advise you on whether bankruptcy is the appropriate solution for you.
Contact us today to review your bankruptcy situation today.
Call or text 828.286.3866 or complete a Case Evaluation form