rebuild credit after bankruptcy

How To Rebuild Your Credit After Bankruptcy

Many people are hesitant to file for bankruptcy because of the negative connotations associated with bankruptcy declarations. Many people are under the impression that bankruptcy showing up on your credit report for up to ten years is going to adversely impact their ability to ever obtain a strong credit score. But the fact remains that filing for bankruptcy can actually be one of the best things you can do for your credit when you are struggling to cope financially.

Immediately after you file for bankruptcy and receive the debt relief you had been looking for, you can begin to rebuild your credit. But there are several steps that you will need to be prepared to take if you hope to avoid the same mistakes that caused your credit decline in the first place. At Padgett & Robertson, we can assist you throughout your bankruptcy declaration and credit rebuilding processes. Schedule your no-risk case review when you call us at (251) 342-0264.

Your Credit Could Actually Improve Right Away

People often assume that it will take months or even years for their credit to bounce back from bankruptcy. It’s true that bankruptcy is a negative mark on your credit report and will affect your score accordingly. However, depending on your financial situation before filing, your credit score may actually increase fairly quickly after bankruptcy. Late payments, a poor debt-to-credit limit ratio, and excessive accounts can all drive your score down. When those clear up after you file, your score may improve.

Get Copies of Your Credit Reports

One of the best things that you can do after you have declared bankruptcy and are beginning to rebuild your credit is to get copies of your credit reports. You are allowed to obtain one free copy of your credit report each year from each of the credit bureaus. It would be in your best interest to obtain copies from the three largest credit bureaus, Experian, TransUnion, and Equifax.

Once you have received the copies of your credit reports, you need to go through them in detail. It is important that you go through and make sure that your current good credit behavior is being noted. You will want to go through your reports and make sure to initiate disputes where appropriate.

It would also be a good idea to make sure that the debts that you listed as part of your bankruptcy declaration have been brought to zero. If they haven’t been, you can contact your attorney who can then reach out to the creditors to ensure that they are accurately reporting to the credit bureaus. Failure to be in compliance with the court’s order could result in legal action on your part against them.

Put Bills on Autopay

Missed or late payments are rough on anyone’s credit, but if you have a recent bankruptcy, any negative change can be devastating. To avoid these issues, set up your bills on autopay so your payments are always on time. Of course, you should only do this if you can guarantee that the money will be in your account when the company pulls it.

Beware of Credit Repair Companies

Another important element of rebuilding your credit is learning who you can trust. One of the most important things to avoid when attempting to rebuild your credit are certain credit repair companies. At the end of the day, credit repair companies can do nothing for you that you cannot do for yourself, although the reputable ones can help you do some things more efficiently.

There are multiple schemes that unethical companies use to defraud people who are attempting to rebuild their credit. If you find a credit repair company who you are interested in working with, call your attorney first and check to make sure that the company is worth doing business with.

Don’t Be Afraid to Get Back to Basics

When rebuilding your credit, it’s time to get back to basics. Consider yourself someone with a fresh start and zero credit.  You can start off by making sure that you do not spend more than you can reasonably afford. It is important to pay your bills by their due date, so you do not incur any late fees. Make sure that you are paying your bills in full as well. This may even be a requirement as part of your bankruptcy declaration.

You should also take steps to obtain additional lines of credit. This may seem like the wrong route to take. But many people make the mistake of avoiding having credit altogether after declaring bankruptcy. You can start rebuilding your credit by obtaining a secured credit card that reports to any of the major credit bureaus. Then, when you continue to pay off the balance each month and do not have to pay interest, lenders will slowly be able to see that you are less of a credit risk. This means you will be more likely to be approved for bigger lines of credit in the future that have better terms and conditions.

Get Help from an Alabama Bankruptcy Attorney

Declaring bankruptcy is not the end of the world. In fact, your bankruptcy declaration could have saved you and your family from financial ruin. Rebuilding your credit is going to be an exciting time for you, as long as you take the necessary steps going forward.

Get help getting the answers you are looking for when you contact an experienced Alabama bankruptcy lawyer at Padgett & Robertson. Fill out our convenient contact form or call our office at (251) 342-0264 to schedule your initial consultation today.

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