Improve Your Credit Score After Bankruptcy

You Can Improve Your Credit Score, Even After Bankruptcy

If you’re in debt and considering bankruptcy, you may wonder how it will impact your credit. Fortunately, you can improve your credit score after bankruptcy. And we can help make it easier for you.

The Impact of Bankruptcy on Your Credit Score

There’s no question bankruptcy impacts your credit score. However, in our experience helping clients in Memphis file bankruptcy for over 30 years, we’ve seen far more people improve their credit through bankruptcy than if they did nothing about the debt to begin with.

That’s because by the time you actually need a bankruptcy, your credit is already in bad shape. For most people, dealing with the underlying problem of the debt is the first start to rebuilding your credit. It’s much easier to raise your score and prove yourself to the credit bureaus when you have a clean slate.

This process can take some time. Bankruptcy usually causes an initial hit to your credit score and then stays on your report for a few years. But if you come in with a plan, you can use the bankruptcy process to improve your credit over time and finally have the financial stability you need to pursue your goals.

A Memphis Attorney to Help You Rebuild Your Credit After Bankruptcy

Below, we’ve included some important information about rebuilding your credit after bankruptcy. We want to offer all the resources possible to help with this important part of the bankruptcy process.

To that end, we’ve also published a free report called Life After Bankruptcy that answers a lot of our most frequently asked questions about rebuilding your finances once you’ve gotten out of debt.

We’re available to address your concerns by phone and email, and we never charge extra to our clients for helping you through any part of life after bankruptcy, including rebuilding your credit.

To get started, we offer a free consultation where we can sit down with you and discuss any of your concerns, including concerns over credit. Just contact us online today or give us a call at 901-327-2100.

Rebuilding Your Credit After Bankruptcy

Bankruptcy isn’t the end of your financial journey, and in fact might just be the beginning. Here are some key steps to help you improve your credit score after bankruptcy:

Check Your Credit Report

As you rebuild your credit, it’s crucial you understand your score and keep track of it. You can obtain copies of your credit reports for free from all three major credit bureaus once a year. Carefully review those reports for any accuracies or errors, including any related to your bankruptcy. Dispute any inaccuracies promptly to ensure that your credit report is up-to-date. Most of the companies that offer to look up your free credit reports will explain how to dispute problems in those reports.

You can also use credit monitoring apps to continue checking in and make sure everything stays consistent.

Create a Budget

Budgeting is an important part of rebuilding your credit. If you’re not used to living on a budget, it’s a skill that will take some time to get right.

First, you should plan out a realistic budget that allows you to manage your expenses and save money. Prioritize on-time payments for essential expenses like rent, mortgage, and utilities. These are the expenses that come in the forms of bills every month and it will show up the fastest on your credit report. And lastly, make sure you don’t need to use credit to keep this budget going. It should be doable within your current income.

Open a Secured Credit Card

You should be very careful using credit after bankruptcy. It’s an important tool to rebuild your score, but it can also be dangerous for people who’ve already struggled with their spending.

After your case is dismissed, you’ll likely receive a lot of offers for credit cards. But because of your credit history, they usually come with absurdly high interest rates and other penalties. Even if you were approved, they can be extremely dangerous for anyone, and especially for people who struggled with their spending in the past.

Instead, consider applying for a secured credit card, which requires a deposit as collateral. Make small, regular purchases with the card and pay the balance in full each month. These small payments can help rebuild your credit history by demonstrating responsible credit use.

The credit bureaus like to see that you can make regular payments, so only use it for these small budgeted expenses that you know you can pay off completely every single month.

Apply for a Credit-Builder Loan

Some banks and credit bureaus will offer a loan especially designed to help you rebuild your credit. Essentially, they loan you a certain amount of money that they hold in the bank for you. You slowly pay off this loan a little bit every month. Then, once you’ve paid off the full amount, they release the money to you in the form of a savings account. So not only have you helped rebuild your credit, but you’ve also built up a small savings buffer at the same time.

Become an Authorized User

If family members or close friends trust that you’re doing everything you can to rebuild your credit, they may also want to help. If they have good credit, they can add you as an authorized user on their credit card. You’ll just want to make sure their card issuer reports authorized user activity to the credit bureaus.

The credit company will issue you a card, but your friend or family member doesn’t even have to give you that card for you to benefit. In fact, this might be preferable as you slowly get used to budgeting again.

Get Extra Help

Rebuilding your credit after bankruptcy is a gradual process that requires discipline and patience. By consistently following these steps, you can demonstrate responsible financial behavior and work towards achieving a healthier credit profile.

But if you find you need additional help or if any of the concepts above feel confusing, you can always reach out to us. This is a service we offer at no charge to our clients.

Client Review

“The Castle firm and the entire staff are just wonderful. I really needed help, and they took the time to listen to me and help me with a Chapter 7 Bankruptcy. They are very knowledgeable. Mr. Castle, Ms. Connie, Amanda, and Mr. Prentiss are just wonderful. Service is A1 all the way, and can not be beat. They make you feel welcome and comfortable on every visit. I appreciate everything, and thanks to them, I am off to a fresh start, and free of all the stress.”
S Coleman