It can be tough to get back on your feet after a bankruptcy. This harms your credit score and makes it hard to apply for new loans. However, it’s not impossible! With discipline and patience, you can surely get on the way to rebuilding your credit score. The following tips will help you improve your credit bit by bit
1. Keep Your Balances Low
Use only a small amount of your available credit. According to experts, it’s best to keep your total balance below 30% of your credit limit. A low credit utilization indicates that you’ll pay whatever amount you borrow, which is a good sign for creditors.
2. Pay On Time
Your non-bankruptcy accounts do not get discharged. Some examples of these are debts like student loans or alimony, which are non-dischargeable.
These accounts continue to be active and continually impact your score. Paying them all in time helps repair your credit by lowering your debt-to-income ratio.
3. Review your Credit Report for Inaccuracies
Bankruptcy appears on your credit report for years after, damaging your score. Still, it’s much better than showing delinquent and outstanding balances.
When your debts get discharged, make sure that it shows as such. It should appear as $0 on the respective accounts.
When you spot any errors, file a dispute as soon as possible. Unfair credit reporting and inaccuracies are not uncommon. Take note of the time that bankruptcy chapters should appear on your credit report. After 10 years (Chapter 7) or 7 years (Chapter 13), your bankruptcy shouldn’t be on your credit report.
Be sure to regularly check your credit reports. You may ask a credit repair service to help you find these errors early and dispute them.
4. Get New Credit
We know that it’s hard to get credit after bankruptcy. However, if you manage to get one and pay it promptly, this builds up a history of on-time payments, improving your credit score.
Here are some ways you can easily apply for new credit:
Credit builder loan: This type of loan helps you improve your credit. Here you have to fully pay off the lender before they release the money.
Secured credit cards: It’s much easier to get a secured credit card than an unsecured one. This is because a secured credit card requires a cash security deposit. After a period of regular payment, credit card issuers will usually convert you to an unsecured credit card or increase your credit limit after a period of regular timely payments.
Retail and gas cards: These typically have lower qualification standards than other unsecured cards.
5. Have Your Payments be Reported to the Credit Bureaus
You may assume that your creditors are reporting your activity to the three major credit bureaus – namely, Equifax, TransUnion, and Experian. Sadly, lenders don’t have such an obligation. Thus, you should make sure that your creditors capture your positive credit activity and that they report it to these bureaus to raise your credit score.
6. Be Careful when Applying for Credit
A portion of your credit score is calculated based on how many new credits you apply for. Multiple credit applications over a short time can hurt your score because it may be taken as risky behavior. This is especially true if you keep being denied.
Be sure that your credit profile fits the requirements before applying. If you’re getting rejected from getting new credit cards, try improving your credit history through other means to increase the chances of your application getting approved the next time around. The following two tips will help you with this, too.
7. Become an authorized user
If you can’t get a credit card, you could ask a close friend or family to add you as an authorized user on theirs. Just by being on the account, your credit improves. If the credit card issuer reports to the credit bureaus, your payments will show up on your credit.
8. Get a Co-Signer
If you can get someone to co-sign for you, your chances of approval for credit increases. Mortgages, rental agreements, and auto loans do take cosigners. If you pay successfully, this boosts your creditworthiness.
Consult with a credible and experienced bankruptcy attorney to help you on your path to financial freedom. Call us at the Northwest Debt Relief Law Firm for legal help and assistance.