Filing bankruptcy and ruining your credit score doesn't mean you're destined to a life of credit rejections. Credit repair after bankruptcy is possible, and this doesn't involve paying a company to help improve your score. Employing a few do-it-yourself credit repair techniques can help reverse some of the effects of a bankruptcy.
Which Debts to Include in Bankruptcy?
The court will need to see a listing of all your debts. However, you don't have to wipe out all your personal debt in your bankruptcy. Talk to your bankruptcy attorney and discuss only eliminating your overwhelming debts in the filing, such as high credit card debts or medical bills. If you can manage debts such as your auto loan and mortgage loan, you can reaffirm these debt obligations and pay these creditors as agreed. Reaffirming refers to keeping some debts and making timely monthly payments. This will help repair your credit after bankruptcy because these creditors will submit positive information to the credit bureaus.
Opening New Accounts
Starting over and opening new credit accounts is a key factor in repairing credit after bankruptcy. You need credit to build credit, and reversing the effects of bankruptcy will require acquiring some type of credit line and managing this account. You could start with a credit card for people with bad credit offered by your personal bank or another local bank. Talk with a representative and discuss requirements for receiving a credit card to begin rebuilding your history. Another option includes applying for a small personal loan (use collateral such as a car title) and paying off the debt within a few months. Whatever option you choose, expect to pay a higher interest rate because of the bankruptcy, and talk to the lender to make sure they report regularly to the credit bureaus.
Managing Consumer Debt
Once approved for a credit card to help repair credit after bankruptcy, manage this account wisely to help boost your credit score and to avoid repeating past mistakes. High debts contribute to bankruptcy, but you can alleviate this problem by paying off new charges in full each month. Keeping low balances on your credit card not only prevent overwhelming debt, it also helps improve your personal credit score. Charge only what you can afford to pay off.
Watch Your Credit Report
Don't let a year go by without monitoring your personal credit report. AnnualCreditReport.com makes it possible for every consumer to review his or her personal report for free. But in conjunction with yearly check-ups, it's wise to review your report a few months after your bankruptcy discharge to ensure that all appropriate debts were included in the bankruptcy. If not, these lenders or creditors may continue to report your account as past due, causing further credit damage.
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