You’ve filed for bankruptcy, and you’re ready to start fresh. Here are some tips for rebuilding your credit score after bankruptcy:
· Make a Budget: You don’t want to make the same mistakes for a second time. Plan out and spend the money that you do have. Do not spend more than you bring in. This may take the commitment of giving up certain lifestyle choices. Do it right this time.
· Keep Credit Card Accounts Open: If you have multiple credit cards, you may think it’s most sensible to cut up the credit cards and throw them out. This is not necessarily true. Credit history is critical when dealing with your overall credit. Keep the credit cards open, and use them responsibly this time. Make payments every month, more than the minimum if you can. A consistent history of on-time payments will raise your credit, even if you have multiple.
· Avoid Using a Debit Card: When starting new, it may be tempting never to use credit again and go on a cash-only system. While that will ensure that you never spend more than you have, it will not benefit your credit. If the focus is to build back up your credit, then you need to use credit cards over debit cards every time. You can still keep track and pay off those credit cards every single month. That is the best way to make sure you are not spending more than you have while building up your credit.
· Use Less Than 30% of Available Credit: If you keep your credit utilization low, that will be the best for your credit score. Think about all of the available credit that you have and make sure you stay below 30% of the total that you can use.
If you set yourself up with a strict budget and regimented schedule of paying your credit card bills, you will watch your credit score steadily climb. Remember that using credit is vital, but this time you can use it responsibly.
Bankruptcy can be a traumatic experience to go through. Our team at Miles & Hatcher, LLP, understands, and we can help you course-correct for a successful future. If you have questions about rebuilding your credit, give us a call. With each new appointment, you will get a free consultation: (909) 481-4080.