How to Fix Your Credit After Bankruptcy

credit and bankruptcy

Fixing Credit after Bankruptcy

 

If you have filed for bankruptcy protection you may be wondering how to recover your credit or what are the best ways to fix your credit score. The good news is that fixing bad credit is not complicated, although it may take some time.

Understanding how your credit score is calculated is the first step. Factors that can affect your credit score include your payment history, bankruptcies, liens, judgments, the amount of debt you owe, the length of your credit history, the number of recently opened accounts, inquiries against your credit report, and the number of accounts you have in use.

Better credit, however, can be achieved with the right steps. You can repair your credit score and get credit after bankruptcy but be patient. Bankruptcy will remain on your credit report for 7 to 10 years, and the credit bureaus are not legally allowed to remove it.

Ways to fix your credit:

  1. Verify that all the main credit bureaus have accurately updated your credit report to remove your dischargeable debts after the completion of your bankruptcy.
  2. Pay all of your bills on time, before their due dates. Making payments and paying bills in full is the number one way to repair your credit rating.
  3. Request a prepaid credit card. Although a prepaid card may charge higher interest rates or have an annual fee, this can be a simple way to prove you are a credit-worthy customer.
  4. Pay off debts; do not shuffle debt around.
  5. Do not open unnecessary credit cards, and if you do have credit cards make sure the revolving credit balance remains low. Your FICO score can be higher if you prove that you have a low outstanding balance given your available line of credit.
  6. Close accounts only if necessary. Closing accounts can also increase the ratio of your debt to available credit. This increases your utilization rate. Keep in mind a credit card must be used at least once every six months to get any benefit when your credit score is calculated.
  7. Create a budget and stick to it.

Follow the tips to repair credit outlined above and you can increase your credit score.