Rebuilding Good Credit After Bankruptcy

A bankruptcy gives you the relief of a financial fresh start but also the worry that your credit will be ruined forever. If you take a proactive approach to rebuilding credit after bankruptcy, however, you can begin to rebuild your credit right away.

Making A Fresh Financial Start

It is true that bankruptcy filers will typically see a short-term dip in their credit scores but for many debtors, bankruptcy can be the first step toward a better credit score in the long term. This is because bankruptcy provides a way to stop the endless cycle of debt, which can take a heavy toll on your credit score over time.

Use Credit To Build Credit

It might be surprising, but one of the best ways to begin rebuilding good credit after bankruptcy is to start using credit again. Once you get a lender to extend credit, charge only small amounts at a time to get in the habit of paying off the entire balance each month.

Above all else, it is important to make all loan and credit card payments on time (or ahead of time) every month, without exception. This helps create a new pattern of financially responsible behavior that will demonstrate to potential lenders that the borrower can be counted on to repay his or her debts.

Shop Around For Better Credit Terms

At first, recent bankruptcy filers may have difficulty obtaining credit with favorable terms. However, it is important not to jump at the first offer just because it seems like nothing better will ever come along. Beware of offers stating things like "Bad credit? No problem!" as these lenders may be setting borrowers up to fail with high interest rates, costly hidden fees and other unfavorable terms.

One option for some consumers who are trying to rebuild credit is to start small with a secured card at a bank or credit union. These cards require an up-front security deposit, which is often equal to the credit limit. Although not ideal for all purposes, a well-chosen secured credit card can provide a good re-entry point for someone trying to establish good credit after bankruptcy.

When choosing a secured card, be sure to read the fine print and compare several options before choosing one. As with other types of credit, the fees and other terms for these cards can vary dramatically, so it is important to shop around and know what you are getting when you sign on.

Contact Us Now For A Free Consultation To Discuss Rebuilding Credit After Bankruptcy

If you are interested in learning more about bankruptcy and how it might affect your credit, call the attorneys at Levitt & Slafkes, P.C. today. You can reach us at 973-323-2953 or you can contact us online.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.