How Bankruptcy Affects Your Credit Score

Filing a successful bankruptcy solves more problems than it creates. That being said, most clients have immediate questions about their credit score. Depending upon your credit score prior to filing the bankruptcy, here’s what you can expect: My Credit Score After Bankruptcy

Immediately Following The Bankruptcy

Apply for credit. That’s right, you are still eligible for credit after filing. You may need to start with a secured credit card, but there’s nothing wrong with that. Once you establish a good payment history with the secured card, you’ll start to get offers for more traditional cards.

Periodically checking your credit report is a healthy financial habit we should all engage in. You may discover errors which can be fixed, or you may discover information which is inconsistent with your beliefs about payment history, amounts, or outstanding balances. You can check it for free once a year at www.annualcreditreport.com.

An Eye On The Future

Consider purchasing a car, if your budget will allow it. Most of my clients get offers to finance vehicles shortly after filing bankruptcy. The debt is secured by the vehicle so the lender is comfortable making the loan. Typically, these are offers from “Buy here, pay here” companies but there’s nothing wrong with that—they will still report your on time payments to credit bureaus and you’ll build your credit score with consistent, on time payments.

A Few Things To Avoid

There are companies that offer to repair your credit. My experience is that they charge a high fee, and you can accomplish the same goal by consistently paying your bills on time and following some easy guidelines along the path.

Keep credit lines open and regularly use them without maxing out the limits. Make small monthly purchases and pay them off within the 30 day cycle following the purchase. A healthy balance, regular use, and consistent on time payments send the signal to creditors that you are responsibly using credit.

Speak With An Attorney

If you have not filed bankruptcy and you would like to speak with an attorney to find out your options, please contact me via email, or call me at 704.749.7747. Every situation is unique but there’s almost always an option available to dramatically increase your financial health and make your life more comfortable as a result.