One common myth about bankruptcy is that your credit is forever ruined. You’ll never qualify for a loan again. This is simply not true. Once your debts have been discharged through Chapter 7 or Chapter 13 bankruptcy, you can take proactive steps to start improving your credit score. Consider these three steps.
- Check behind your creditors. Creditors are not perfect. It’s not uncommon for negative credit history to remain even after your debts have been discharged. Immediately start monitoring your credit history. You can request a free credit report once per year from each reporting agency, Equifax, Transunion and Experian. Stagger your free reports so that you get one every few months That way you can actively monitor your report throughout the year. All debt included in your bankruptcy should be marked as “BK” or with the note, “included in a Chapter 7 Bankruptcy.” If they are not, file a dispute with the credit reporting company. Be sure to include a copy of your discharge.
- Keep up the diligence. Even once you’ve cleaned up your credit report, continue monitoring it at least once a year. Be sure to look for any negative comments, such as “30 days late” or any outstanding balances you were unaware of. Keep your own detailed records and report discrepancies to the credit reporting agency.
- Don’t swear off credit. You may feel like using credit was part of the reason you ended up in bankruptcy. However, not using credit at all will not help restore your credit score. Instead, use credit in moderation. Consider using a pre-paid credit card. If you get a traditional credit card, keep your balance no greater than 30 percent of the credit limit. Always pay on-time and don’t apply for too much credit. Each time a creditor runs your score, you drop a few points.
Credit is constantly evolving. There are actions you can take that affect it positively and actions that affect it negatively. These actions can come back to haunt you when you really need money, such as for a home or vehicle loan. Bankruptcy gives many the opportunity for a fresh financial start. Contact the Chris Wesner Law Office, a Troy, Ohio bankruptcy attorney, to find out if bankruptcy is a viable option for you. Contact us for a free consultation.