hold back on declaring bankruptcy due to the effect it has on their credit. It
can remain on your report for many years and deter you from applying for loans
due to poor credit. Though this is true, if you don’t file for bankruptcy and
let your debts go to collections, you can worsen the situation.
bankruptcy attorney can assist you through the process. They can help you
understand chapter 13 vs. 7 bankruptcy. In as much as bankruptcy lowers your
credit score, it becomes less crucial over time if you start practicing good
financial habits and try to establish new credit after filing. Use the
following tactics to improve and manage your credit score after filing for
Monitor your credit score
You need to
monitor your report after filing for bankruptcy closely. Check the lists of
debts that are included in the bankruptcy and keep track of their status after
the court discharges your debts. Your debts should show a £0 balance if you
filed Chapter 7 bankruptcy. Talk to the credit report issuer to make the
necessary changes if the report contains inaccurate information. Do not forget
to confirm with your original lender.
Try to re-establish credit
mentioned that bankruptcy remains in your report from 7-10 years depending on
the type you file. If your account is not that old, it appears as if you don’t
have any credit. After your bankruptcy is discharged, you should, therefore,
make sure you apply for credit to help you rebuild your score and re-establish
your credit history.
You can do
this with the use of secured credit cards or store credit cards. It is easy to
qualify for such cards since they come with some few requirements. Beware of
the hefty fees and rates associated with them and go through the disclosures
before your application. Try applying for a car loan six months after
completing the bankruptcy.
Maintain your old accounts
boost your credit history by letting your old accounts remain intact and
active. Most of the people who declare bankruptcy has good credit before
getting into tough financial situations. If this describes you, old items in
your report can help your credit score even if you file for bankruptcy.
Avoid applying for multiple accounts
for new accounts can affect a certain percentage of your credit score. In as
much as experts advise you to apply for new credit after bankruptcy to rebuild
your score, do not open numerous accounts. When applying for a big loan such as
a mortgage, ensure you spread out the application over an extended duration. Applying
for minimal accounts can also help you manage them effectively to avoid
irresponsible financial habits.
bankruptcy should not be the end of your financial growth. You can still apply
for a loan or new credit cards like any other individual. If your credit score is poor due to reduced limits and multiple payments, it
is better to file for bankruptcy instead of staying in that situation. Try
implementing the strategies above to help you get back on your feet.