Improving Credit Score After Bankruptcy

No one wants to have to file for chapter 7 bankruptcy. Still, it’s the only way out of a difficult financial situation in many cases. Bankruptcy can be a lifesaver for many individuals and families. 

The drawbacks of filing for bankruptcy mainly have to do with building back your credit. After filing, you’ll want to become eligible for loans, a mortgage, and other lines of credit as soon as possible. Unfortunately, many people assume this is impossible.

But what if we told you there was a way to improve your credit score, even after you filed for chapter 7 bankruptcy? Below, we’ve outlined our top tips for rebuilding your credit after bankruptcy.

Maintain a reliable source of income over a long period.

Many aspects of your life and finances are considered when you apply for a new line of credit. If you want to improve your credit, make sure you’re maintaining one job for as long as possible, and avoid “job hopping” 

Pay all of your bills on time.

This should go without saying, but make sure you’re paying your bills on time. This goes for bills that were renegotiated through your bankruptcy and payments through non-bankruptcy accounts. Often, some debt won’t be erased through bankruptcy (this is true for alimony and student loan payments, for example).

 Even though it may seem like these payments aren’t as important as a result, you still need to make them on time to remain in good financial standing after bankruptcy.

Sign reaffirmation agreements when you can.

Generally speaking, a reaffirmation agreement is an excellent tool for rebuilding your credit score.

What is a reaffirmation agreement?

It is essentially a new contract that you sign with a secured lender, such as a mortgage holder or the person giving you a loan on your car. The agreement states that you will continue to make (sometimes renegotiated) payments on the property you’re in debt for. In exchange for a reaffirmation of payment, you can keep the property.

Be smart when it comes to applying for new lines of credit.

At some point, you’ll want to start reapplying for lines of credit. Doing so and earning new credit with lenders (that you then pay off each month) will help build your credit even more. Still, you don’t want to get too far ahead of yourself. Only accrue credit you can afford to pay off right away. Moreover, don’t go for just any credit card. Choose those with the lowest interest rates possible, and level up over time.

Want to Learn More About Rebuilding Your Credit After Bankruptcy? Contact SM Law Group Today

It’s never too late to start improving your finances and rebuilding your credit. The experts at SM Law Group in Encino, California, can help.

We offer free initial consultations to individuals interested in bettering their credit after bankruptcy. Contact us today to learn more and schedule your appointment.