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After you and your bankruptcy attorney have had your unsecured debts discharged under Chapter 7 bankruptcy, you will face a challenge in rebuilding your credit.  Initially, your poor credit score may cause you to struggle when encountering credit-based decisions. These hurdles will include applications for apartments or credit cards, pre-employment screens and heightened insurance premiums. So, what is the process of resurrecting your credit score?

5 Smart Credit Rebuilding Tips

Confirm Your Credit Report

Allow a few months for the credit reporting agencies to process and make the adjustments to your reported debts. Verify that all the accounts that were included in the bankruptcy are properly revised. Any errors or inaccuracies should be reported to creditors and reporting agencies for correction. Unless you have significant secured debt, such as government student loans or past due child support, you likely have little outstanding debt.

Seek New Credit Opportunities

There will be instances for you to establish new credit account over time, and it is important to pursue them. You goal in seeking to initiate new credit-based opportunities is not an excuse to purchase unnecessary products or services—approach the process responsibly, focusing on executing the cycle of making purchases and promptly paying them back.

Secured Credit Cards

Secured cards are a good option after filing for bankruptcy. These are very similar to debit cards in that your available spending limit is simply the amount you deposit in the account. The difference compared to debit cards is that credit agencies report on the status of these accounts. They function similarly to unsecured credit cards when required for such as in car rentals and hotels. Usage of these cards over periods of time may lead to receiving offers for unsecured cards. Be sure to avoid secured cards with outrageous fees, which are common in this market.

Automobile Purchase

bankruptcy-attorneyThe lenders within the auto industry have a “sub-prime” segment of financing designed for those with poor credit. Consider various lenders in the process, as the interest rates can fluctuate tremendously. The rate is going to be exorbitant regardless, yet for your purposes of credit restoration, this route will likely have a great impact. You must confirm that the lender is one that reports to the credit agencies. Avoid the “buy-here-pay-here” arrangements which lack a third-party lender, and are more like a personal loan from the auto dealer.

Obtaining Unsecured Cards

Over the course of 12-24 months you may have an opportunity to receive an unsecured credit card. This will allow you to boost your credit by using the card for purchases and paying back the balances. Remember that your purpose is to consistently complete the cycle of purchasing and paying back the balance.

The feeling of being “over your head” in debt can be agonizing. If you are only able to make the minimum payments on your credit debts, it is unlikely you will eliminate the principal balance as interest accrues. At Greene Law, PC, we have assisted Connecticut consumers in obtaining a second chance and restoring their financial situation through bankruptcy. Contact the office today at (860) 676-1336 for a free consultation with an attorney.

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