3 Ways to Rebuild Your Credit After Filing for Bankruptcy
In these difficult economic times, many Georgians have found that the best choice for them and their families is to file for bankruptcy in order to come out from under their household debts. Speak to your bankruptcy lawyer to see if bankruptcy is a good option for you.
Before someone embarks on the bankruptcy process, one of the most frequently asked questions he/she has is, “How will this bankruptcy case affect my credit score?” This is a great question because as we all know, credit scores are important especially if you want to buy a house or a car in the near future. The short answer to this question is “maybe” because whether or not your credit score will be adversely (or positively!) impacted by a bankruptcy case depends on your financial circumstances before you file the case.
Since improving your credit score is always a good idea, please read on to learn more about a few of the ways you can rebuild your credit after you file for bankruptcy.
1. Consider getting a credit card with a very low limit and pay it off every month. This is also great advice for people are just setting out in their financial lives, such as college students. This tip works great if you can be disciplined in only using the credit card for small purchases, say your gas expenses every month, and then you pay off the balance in full on a monthly basis (getting a card with a low limit helps keep you disciplined in this regard because even if you want to charge $10,000 to it you can’t!)
2. Don’t close your older credit accounts. This may seem like a strange tip, but one of the factors that credit companies utilize when determining your score is to look at your oldest credit line to see your history of making payments on time (or missing payments). So even if your oldest credit card is for a store you no longer patronize, there is no harm in keeping the line open.
3. Do not take on additional debts if you can help it. Set a specific timeframe, such as a year or six months, wherein you and your family agree to not take on any additional debts. Another factor that the credit companies use to determine your credit score is by looking at your debt to income ratio. You have a lot more control over the debt you take on than the income you bring in, and so use that power to your advantage and keep that ratio down.
Remember, there is always life after bankruptcy. If you have begun your bankruptcy journey and now need guidance, or if you don’t know where to start the process on getting your financial life back on track, contact our office at 404-913-1529. We look forward to speaking with you!