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Bankruptcy Law Blog

Friday, August 31, 2018

6 Tips For Improving Your Credit Score Post-Bankruptcy

The biggest downside to filing for bankruptcy is that it can make it hard to get access to credit in the future. This may not sound like a bad thing since going into debt is what pushed you toward bankruptcy, but it makes it difficult to pay for large purchases most people can’t purchase outright. Imagine never being able to finance a car, buy a house, or apply for student loans again. The only way to overcome the hit your financial reputation takes when you file for bankruptcy is to slowly rebuild your credit score.

A credit score is like a financial report card, but instead of A’s, B’s, and C’s, the score is numeric. Scores range from 300 to 850, with the highest scores being the best. In general, the higher your credit score, the easier it is to get a loan, a new credit card, or what have you.

In addition, the higher your score the better terms lenders will offer you. For example, even if you have a terrible credit score you can probably find some credit card company that will welcome you as a client. However, you will probably have a really low limit on the card and sky high interest rates.

Filing for bankruptcy drops your credit score significantly, but it doesn’t have to stay down forever. Below are six things the average Alabama resident can do to improve his or her credit score.

1. Find out what your current score is.

Your credit score will probably never be lower than it is right after you go through bankruptcy, so find out what it is and then watch it rise as you establish good financial habits. It can be really rewarding to watch your credit score get better and better.

Many lenders will tell you what your score is, or you can pay to see your score at myfico.com.

2. Correct errors on your credit reports.

Credit scores are based on your credit report, which is a summary of your debt and financial habits.

You can get a free copy of your credit report from each the big three credit reporting companies, Experian, TransUnion, and Equifax, each year. In order to request your free copy, we recommend following the instructions on annualcreditreport.com. Other sites that offer “free” reports or scores may do so only for a limited time, and then start charging you a monthly fee.

Every time you get a copy of your credit report, look it over closely. If there are any mistakes, report them right away. A mistake could come from a simple clerical error, or it could be a sign that you are the victim of identity theft. Having a report that is accurate will ensure your credit score is accurate.

3. Pay your bills on time.

The quickest way to raise your credit score is to pay your bills on time. If you have trouble with this, see if you can set up an automatic, online bill payment. Or talk to your lenders and try to get all of the bills due on the same day each month so you only have to remember one due date.

4. Don’t close all your accounts.

It can be tempting to swear off debt and vow never to use credit cards again if you have had trouble paying off your debts in the past. Instead of closing every account you have, close just the ones that have an annual fee or otherwise punish you for not spending money with them. Keep a few accounts open to demonstrate that you have access to credit, even if you aren’t using it.

5. Use credit wisely.

Demonstrate to lenders that you are responsible with your money by getting a credit card and paying it off each month. If you have to use it for an emergency expense and can’t pay off the full amount, pay at least the minimum payment and anything over the minimum that you can.

6. Beware of those selling a quick fix.

You may be approached by various companies that offer to help you repair your credit or monitor it on your behalf. This might be helpful for some people, but for many folks it is a waste of money. If you develop good financial habits your score is going to improve on its own without someone else prodding it along. There is no need to pay a fee to a company to do something you can do yourself.

If you have fallen deep into debt, contact a bankruptcy attorney for advice.


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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”