Helpful tips to re-build your credit, and rise from a bankruptcy filing
Life after filing bankruptcy can be challenging and confusing. Filing bankruptcy can wreak havoc on your credit and your emotions, but that doesn’t mean that you can’t build yourself and your credit back up. Although rebuilding your credit will be difficult, there are some simple things that can be done to start re-establishing your credit.
Here are some helpful tips.
- Get a credit card. You may be asking “Why would I get a credit card right after I have filed for bankruptcy?” It may be ironic, but getting a credit card is a great way to begin establishing good credit. If you want to improve your credit score, apply for a secured credit card that reports to all three credit bureaus. Avoid credit cards with high fees and low credit limits and do not apply for too many cards. Use your new credit card, but keep the credit card balance low. At the end of every month, pay off the credit card, in full. (Helpful Tip: Only use your credit card for a specific purchase, such as gas. After every purchase, deduct the amount out of your checking account so that you are prepared to have the money available at the end of the month.)
- Check your credit report regularly. You have been through bankruptcy to gain a clean slate, so you will want to keep it that way. Each bureau will give you one free credit report each year, so make sure that you get a credit report from each bureau.
- Equifax: 800-685-1111
- Experian: 888-397-3742
- TransUnion: 800-888-4213
Be sure to dispute any incorrect information on your credit reports, and be sure to report any discharged debts that may appear on your credit report.
- Make a budget. Make a plan and know how much money you need to live every month. Try to be as strict and honest as you can on what your needs really are. Once you have a better idea of what you will need to live, you can get started rebuilding your credit. Here is a list of a few essentials that will help you get started on your budget.
- Whether you pay rent or have a mortgage, this will likely be the largest expense in your budget. Be willing to adjust your housing situation if your current payment is more than you can afford.
- If you own a car, figure out the cost of driving and maintenance per month. Include such things as insurance, gas, maintenance and registration.
- Include all monthly home utilities such as water, electricity, trash, etc.
- Phone/Communications. Having access to a phone is usually unavoidable. Consider consolidating your home phone and internet into one smart phone. If your phone bill is eating a large portion of your budget, speak with your wireless service provider to evaluate your options of phone plans.
- Realistically evaluate how much money you spend on food each month. Consider eating from home rather than eating out. Dining out can eat away at a budget quickly, so make sure to keep restaurant visits to a minimum.
- Start saving money. It is imperative that you begin saving after being discharged from your bankruptcy. Life happens and building an emergency fund will help you find the financial freedom you will need if an unexpected event occurs. The best practice is to start small. Many financial experts will advise you to have enough money to cover approximately 6 months of expenses, but to get started, begin with what you can and strive to get your savings built up to between $500-$1000 to start. Eventually you will want to make a large purchase again in the future such as buying a house or a car. Having enough money saved for a large down payment will make it easier to obtain approval for your loan as well as lower interest rates.
- Pay your bills on time. If you are in the habit of paying your bills late and incurring late fees, now is the time to make a change. Building your credit extends into your monthly bills. The phone company and the power company are both creditors, so paying on time is very important.
- Open a new checking and savings account. If you do not already have one, open a new account at a local bank or credit union. Compare interest rates, fees and services at each bank you are considering.
- Open a line of credit. If you already have a checking or savings account with a banking institution, ask if you can open a line of credit using a savings account to secure the loan and be sure to keep enough money in the account to secure the payments back to the bank.
- Avoid finance companies. Beware of companies offering to “fix” your credit after bankruptcy. Finance companies exist to make money. Avoid debt consolidation offers and focus on maintaining your budget, increasing your savings and building your credit limit with your secured credit card over time. Re-establishing your credit is hard, but it’s something that can be done yourself and for free.
While the task of rebuilding your credit score can be daunting, it is completely doable. With the right attitude and persistence, you will be able to create the financial freedom you have always wanted.
Who can help me with my bankrupcty?
The attorneys at Hall & Navarro are passionate about law. We serve Effingham County, Bulloch County and surrounding areas. The law offices are located in Springfield, Georgia and in Statesboro, Georgia. The attorneys at Hall & Navarro provide focused and experienced representation from your initial consultation until the resolution of your legal matter. We offer a broad range of legal services and are dedicated to serving individuals and businesses.
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