Rebuilding Credit

Because filing for bankruptcy can and most likely will affect your credit score, it is important to have a plan in place to rebuild your credit once your debt has been discharged. It may seem like a daunting task, but in reality, it can be easier than you might expect. There are a few things you can do to make sure that your credit is acceptable by the time you are finally out of bankruptcy; all you need to do is a bit of careful planning and a bit of smart budgeting and you can be on your way to a good credit score.

Cards

The easiest way to begin rebuilding your credit is to get a secured credit card. These can be obtained through banks and are not hard to get. They are called "secure" because you must give a payment to a bank before you can use the card. This payment is the amount of money you can spend with that card, and you simply need to replenish that account the way you would with an unsecured credit card. This is a very safe way to begin rebuilding your credit because you cannot spend more than you initially deposit. The trick is to spend money each month, but only spend what you can pay off easily and keep your payments regular. Other cards, such as unsecured credit cards and retail cards, can help rebuild credit as well; however, they are more difficult to obtain after bankruptcy because they require a certain amount of trust and bankruptcy makes companies less likely to trust that you can repay them.

Student Loans

If you had to take out student loans while you were in school, you can actually use these to rebuild your credit. In the same way that keeping current with credit card payments will help, so too will keeping current on loan payments. Because student loans are not included in bankruptcies, you must repay them anyway; it is worth your effort to stay current even if it is possible for you to defer them. Other types of loans can help you rebuild credit as well, but it is not a good idea to take out a loan so soon after filing. In fact, it is unlikely that you would be able to take out a significant loan in the first place because, like unsecured cards, approval for a loan requires a degree of financial responsibility that is called into question by bankruptcy.

Regular Payments

A little-known fact about credit is that simply paying your bills on time can help your score. Postponing payment, receiving late fees, and obtaining special deals do not make you look responsible, but if you pay on time every month, it will help rebuild your credit. Your credit score is used to judge whether or not you can be trusted to pay back your debts; even with a bankruptcy affecting your credit, you can establish yourself as a responsible person who made, but is now rectifying, a mistake.

"I was worried I would lose everything. Brian helped me sort things out and restored my life. I don't know where I'd be without him!"

-Sue H. Ogden, UT