Many people worry about the effect
bankruptcy will have on their credit, but their credit is often already severely
damaged by debt. If you have a high credit score, filing for bankruptcy
can have a substantial impact on your credit. If you have a low score
already, however, the difference may be negligible.
Regardless of the initial impact bankruptcy has on your credit score, it
will make it more difficult to repair or rebuild your credit moving forward.
With patience and a sound plan, however, you can effectively
repair your credit history to qualify for home loans, auto loans, and more.
Pay Your Bills On Time
Perhaps the single most important factor in rebuilding your credit is to
pay your existing debts and bills on time. Following the completion of a
bankruptcy filing, the credit bureaus will pay close attention to how frequently you pay
your remaining debts, including mortgage payments and car payments. Even
rent payments are tracked by some of the major credit bureaus.
Get a Secured Credit Card or Loan
Once you’ve been able to establish some savings, you can usually
get a secured credit card or loan. This allows you to put up cash as collateral,
and receive a credit line which is equal to the collateral. By charging
a bit every month, and paying it off BEFORE the bill is due. Do not confuse
secured cards with prepaid cards – although similar, most secured
cards will report the activity to the credit bureau, which is crucial
when rebuilding credit.
Keep in mind that even with collateral, you still may not be able to qualify
with some banks, especially if your bankruptcy happened in the last year.
If this is the case, just continue to be financially responsible and try
applying again in a year.
Stick to Your Budget
A comprehensive household budget is crucial for anyone, but it can be particularly
helpful when reorganizing your finances after bankruptcy. You should try
to create a budget in which you live below your means, which will allow
you to save money for a rainy day. This can also help you make sure you
are able to pay off your credit cards on time.
Overwhelmed by debt? Trust the experienced Oklahoma bankruptcy attorneys
at Alexander Hilton & Associates. Get started today by
calling (405) 294-4330.