How to Fix Your Credit After Filing for Bankruptcy

Bankruptcy is a very serious matter, but it isn’t the end of the world.  

Although filing for bankruptcy can hurt your credit for a long time, there’s a way to recover and bounce back.  

That’s what this article is for — we’ll be discussing some ways you can fix your credit and recover after filing for bankruptcy. 

Let’s dive right in.  

Pay Non-bankruptcy Credit  

Which one of your accounts has not been closed when you filed for bankruptcy?  

Although being bankrupt cancels most of your debt, some debts remain. And you want to regularly pay down those balances to lower your debt-to-income ratio. That, in turn, should boost your credit.  

Do not Borrow Too Quickly  

You might feel the urge to get funds right away. However, this isn’t usually a good idea.  

For one, applying for new credit too soon after bankruptcy will trigger hard inquiries on your credit report. That can lower your score even further.  

Monitor Credit Reports and Credit Score  

As you continue paying your remaining debts, you can ask lenders and creditors to report your activity to the credit bureaus, which collect and research your credit information and sell to creditors.  

The three major credit bureaus to report to are:  

  • Experian 
  • TransUnion (Also trading as ‘Call Credit’)
  • Equifax  

You can also have your non-credit related payments reported to the bureau, although not all credit scoring models include these payments:  

  • Rent 
  • Cell phone bills 
  • Utilities  

Review your free credit reports afterward to find any reporting errors. Dispute such errors right away. 

Consider Cosigning  

A cosigner is someone who acts as a legal financial backer if you cannot make payments.  

When you have a cosigner on a loan or rental agreement, you increase your chances of approval after bankruptcy.  

Auto loans, mortgages, and rentals often take cosigners.  

Keep Balances Low 

Keeping your credit card balances low is a surefire way to prop up your credit score. Don’t focus on how much you pay off monthly; focus on how much you charge, to begin with.  

Keep your balance below 30% of your credit limit at any given time. If you can pull off less than 10%, that’s better. Lenders will know you can pay what you borrow.  

Now, Get New Credit  

Applying for new credit is an extremely challenging task to do after filing for bankruptcy. However, it’s also one of the most important steps in rebuilding your credit score.  

If you cannot get approvals with traditional cards, try secured credit cards or loans.  

You will need a security deposit, but issuers usually convert to unsecured cards if you consistently make timely payments for one year. 

Rebuilding Your Credit Slowly But Surely  

Bankruptcy is never a welcome experience. It will be present on your credit report for seven to ten years and it will give lenders and creditors a negative impression of your financial capabilities.  

But this is also the reason why you should strive to rebuild your credit. Treat bankruptcy as a new start — a second chance, so to speak.  

Take it slow and be patient. It may take a while, but it’s more important to recover surely than quickly.  

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