McFerran Law,
P.S.
Practicing Real
Estate Law in Western Washington since 1986
September 19th, 2016
Life After
Bankruptcy:
7 Steps to Rebuilding
Your Credit
Declaring bankruptcy
affects not just your finances and personal life, but your credit score as
well. Your credit score often diminishes during the financially
trying times leading up to bankruptcy. Each missed credit card, auto loan,
or mortgage payment will take a hit on your credit score. If you
elect to declare bankruptcy, your credit score will further
decrease. A bankruptcy will remain on your credit report for up to
10 years, and there is a good chance your Fair Isaac Company score, more
commonly known as your FICO rating, will be low following a
bankruptcy. With this being said, you do not have to wait 10 years
to rebuild a positive credit score. In just a few years following
bankruptcy, your credit can improve drastically if these following steps are
adhered to:
1.
Review your credit report—It
is important to begin the process of rebuilding your credit by first gaining an
understanding of where you stand. You have the right to obtain one free
credit report a year from Experian, TransUnion, and Equifax on annualcreditreport.com.
Once you retain your copy, in addition to assessing your score, review the
credit report for any errors. Contact the credit reporting agencies to
correct any inaccuracies that will negatively impact your score.
2.
Always pay your bills on time—Your
payment history has a considerable impact on your credit score, making up 35%
of the overall rating. Accordingly, one of the easiest ways to bring up
your credit score is to pay your bills on time. It is helpful to put
reminders on your calendar every month by the due date. Additionally,
many services allow you to set up an automatic payment system, which will ensure
you do not forget.
3.
Cautiously apply for credit—Credit
cards can play a critical role in rebuilding credit. If you did not keep
a credit card open during bankruptcy, you should apply for one after your
bankruptcy has been discharged. You may need to open a secured card,
which requires you place a security deposit with the issuer. Make sure
you do not repeat past mistakes—pay off the full balance whenever possible and
be careful not to amass any significant debt.
4.
Know your limits—For rebuilding
credit, as well as ensuring a positive financial status, be aware of the limits
on your credit cards and keep balances well below it. Use all credit
cards sparingly and pay the bill on time, every time.
5.
Be wary of credit repair services—You
will likely receive mailings from companies promising to help repair your
credit. Investigate any such services before you use them, as they may
charge hefty fees and attain few results. You can rebuild your credit on
your own at no cost.
6.
Obtain a loan—A year or two
after your bankruptcy, you may want to consider applying for a car loan or line
of credit. Be sure the loan is affordable and that you can successfully
pay it off. You may receive higher interest rates. Shop around and
know that your rates will drop in the future with successful repayment of the
loan.
7.
Do not close accounts—After
declaring bankruptcy, you may be leery of credit cards and lines of
credit. Many individuals go so far as to close these lines of
credit. Taking this action can have a damaging effect on your
credit. Closing accounts reduces the amount of credit available to you,
thereby diminishing your credit score. Keep lines of credit open even if
you do not use them.
Call us for a free
bankruptcy consultation to see if you qualify for bankruptcy protection. Not
only will we review your current financial circumstance, we will explain your
options and the advantages/disadvantages of each. Bankruptcy is only one
option. The number to call is 253-284-3838 to schedule an appointment at any of
our offices in Tacoma, Kent, Seattle (Northgate), Everett and Silverdale.
Information received with permission by:
Richard J.
Welt
Attorney
at Law
McFerran
Law, P.S.
1833
No. 105th Street, Suite 101
Seattle,
WA 98133
3906
So. 74th St
1833 No. 105th St, Ste. 101 25028 104th Ave SE
Tacoma, WA 98409
Seattle,
WA 98133
Kent, WA 98031
2520 Colby Ave,
Ste. 101 9633 Levin Rd,
Suite 101
Everett, WA 98201
Silverdale, WA 98383
McFerran Law is a
debt relief agency as defined by federal bankruptcy law.
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