Restoring Credit After Bankruptcy
If you’re considering bankruptcy, your credit score has probably dropped while your debts have mounted. In the Chicago area, before filing for bankruptcy, consult first with an experienced Chicago bankruptcy lawyer who may be able to recommend other options. Every time you miss a mortgage payment, auto loan payment, or credit card payment, your credit score suffers damage; if you declare bankruptcy, you’ll take another credit score hit. Although a bankruptcy remains on your credit report for up to ten years, you won’t have to wait a decade to rebuild your credit. In just several years after bankruptcy, your credit score can dramatically improve if you follow these steps:
1. Pay your bills on time. About a third of your credit score is determined by whether your bills are on time or typically paid late, so paying on time is one easy strategy for credit score improvement. Most banks and creditors now offer automatic online payments, so the payment gets made even when you forget about it.
2. Review your credit report to know where you stand financially. You have the right to obtain one free credit report a year from Experian, TransUnion, and Equifax at annualcreditreport.com. Along with assessing your score, review the report for mistakes, and contact the agency to correct any errors.
3. Be careful applying for credit. If you did not keep a credit card during the bankruptcy process, apply for one after the bankruptcy is discharged. You may obtain a secured card, which requires you to place a security deposit with the issuer. Make sure you do not repeat past mistakes – pay the full balance when possible and don’t build up debt.
4. Get a loan a year or two after your bankruptcy. Apply for a car loan or line of credit. Be sure the loan is affordable and that you can pay it.
When you’re careful and patient, bankruptcy can help you restore your credit over time. A good bankruptcy lawyer can evaluate your current financial situation and determine if bankruptcy is the right option for you. If you’re overwhelmed by mounting debt in the Chicago area, get help at once and speak with an experienced Chicago bankruptcy lawyer.
