After bankruptcy, get your credit together
Image Source: Flickr User Prairie Kittin
Many people see bankruptcy as a last resort. Don’t think of it that way. Others see it as a financial get out of jail free card. Don’t think of it that way either. Instead, think of bankruptcy as a fresh start that you can’t get through any other means. Bankruptcy can be a useful tool to get your finances back on track faster than any other approach (short of winning the lottery). Here are five tips to make the most of your fresh start and improve your credit score after bankruptcy as soon as possible.
#1 Check out your credit report ASAP and often
Be sure that your credit reports accurately reflects the bankruptcy petition. Just because you included all of your debts on the bankruptcy petition does not mean your credit report will reflect this as it should. About two months after your discharge, pull all three credit reports and go through them with a fine-toothed comb. If you see any accounts older than seven years that should have dropped off, request these are corrected. Also, ask for corrections on any items not showing a zero balance in bankruptcy.
#2 Think about the error of your ways
No one likes to dwell mistakes they’ve made but knowing where your finances went awry can help you avoid making these mistakes again. Whether it was an illness, unemployment, or another issue, understanding it can help you prevent a recurrence. However, this is not a time to beat yourself up about it. It’s a mistake and after you file bankruptcy and get a financial fresh start, it will be part of your past. Understand it. Decide how to prevent it from happening again then move on to your future.
#3 Start with a secured credit card
Once your credit report is cleaned up, it’s time to start rebuilding. Generally, a secured card is the best place to start. Be sure to carefully consider which cards you apply for because having your credit report pulled by a creditor – even a secured one – can make your score drop if you have too many inquiries at once. Pre-screen the cards you’re considering, look for ones with little or no fees and then use the card responsibly but regularly. Another tip is to look for one that can convert to an unsecured card later.
#4 NEVER pay a bill late
This is good advice for the rest of your life. Paying any bill late can result in a domino effect of failing finances. Paying bills late leads to late fees, interest, additional security deposits on utilities, and a host of other ill effects. Set up a budget – decide which bills to pay on each payroll and never miss a payment. Saving and building up an emergency fund will shield you from complications caused by minor crises like a broken appliance or unexpected car repair.
#5 NEVER credit spend again
Credit spending is a bad habit. This mean swiping your card for a purchase you can’t afford to pay cash for before the credit card statement comes due. Using your credit cards regularly and paying promptly (before the statement cuts each month to avoid any interest charges) each month will result in credit line increases and an enhanced credit score. However, carrying balances, paying late, or maxing out cards can put you right back in a bad position. Use your cards wisely and see your score improve.
Click here to learn more about improving your credit score after bankruptcy and to find out more about the benefits of North Carolina bankruptcy, contact the Law Offices of John T. Orcutt today. Call +1-919-646-2654 now for a free no obligation consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington, North Caroline. Get the fresh start you deserve – we can help.