How can I rebuild my credit score after filing bankruptcy?

There are several steps you can take to get back on the road to good credit immediately after filing bankruptcy.

1. Apply for a new credit card. If you cannot get an unsecured card, you may be able to get a secured card. Secured credit cards are a great way to restablish credit. A secured card requires a cash collateral deposit that becomes the credit line for the account. So if you put $500 in the account; you can only charge up to $500. You may be able to add to the deposit to get more credit, or sometimes a bank will reward you for good payment and add to your credit line. Make sure the credit card reports to credit reporting agencies so that they effect your credit score.

2. Get a copy of your credit report after you are discharged. Make sure every debt that was included in your bankruptcy and discharged reflects a zero balance – not a late payment or chargeoff. Creditors often fail to report information consistent with forgiveness of the debt. Report any errors to credit agencies.

3. Use the credit cards and make all payments on time.

4. Get a co-signor. Banks will be much more willing to extend credit and you will still be the primary account holder.

5. Avoiding further credit reversals.  This include actions like foreclosures, judgments, collection actions, evictions, and tax liens.

Rebuilding your credit is an important step toward reaching financial stability. For more information, contact a Seattle Bankruptcy Lawyer.

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
425.889.9300

 

 

Will bankruptcy affect my credit score?

Yes. A bankruptcy will remain on your credit report for up to 10 years from the date of the filing. Your credit score will probably decrease by somewhere between 150 and 250 points. This is a big drop and it may make getting a loan difficult right after you emerge from bankruptcy.

But if you are in a position where you are contemplating bankrtupcy, the hit to your credit score is very likely worth it. Letting your debt mount and incurring late fees and charges may be just as harmful to your credit score, if not worse. In fact, depending on your situation, filing for bankruptcy might even increase your credit score.

 Although, it may initially be difficult to get loans without a co-signer for major purchases like houses and cars, most people are able to obtain new credit immediately after filing because creditors know they will not be able to file a Chapter 7 bankruptcy (which wipes most or all unsecured debt) again for 8 years. About two years after filing for bankruptcy, most consumers are able to seek credit on normal terms. This is because all or most of their debt has been wiped clean, and they are now living on a budget they can afford. Outstanding balances, late payments, and records of unpaid debt are removed from your report and marked as “Included in Bankruptcy.” This notation will typically be removed from your credit score after 7-10 years. By opening new credit accounts and making prompt payments, your score could be back in the 700s within 2-3 years.

If you are considering bankruptcy, your credit score should be low on your list of concerns. If, like most people in your situation, you are deep in credit card debt, your credit score is already hurting. Filing bankruptcy can help you get the fresh start and protection you need to get control of your debt, and rebuild your score.

For more information, contact a Seattle bankruptcy lawyer.

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
425.889.9300