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Credit Scores and Bankruptcy: Rebuilding Your Score

Credit Scores and Bankruptcy: Rebuilding Your Score

Credit RatingPart 4 of 4.  In the last couple of blog posts we’ve looked at credit scores in detail, and for our final blog post in the series we’re going to look at what you can do to help rebuild your score after filing for bankruptcy. Even though a bankruptcy will stay on your credit report for 7 or 10 years, depending on the type of bankruptcy you go through, you can begin rebuilding your score as soon as you complete the bankruptcy process. Here’s how you do it.

Rebuilding Your Credit History

To begin the credit rebuilding process, the best thing you can do is pay any debt obligations on time each and every month. If, for example, you emerged from bankruptcy and were able to save your home, you will need to make all mortgage payments on time. Timely payments are the most important single factor when it comes to credit scores, and by making all payments on time you can begin to slowly rebuild your score. (See our prior post on Credit Score Factors for a more detailed explanation of what goes into your score and what you can do to improve it.)

New Credit Cards

Obtaining new credit after a bankruptcy is often very difficult, but not impossible.

To start, you’ll want to consider applying for a secured credit card about six months after you emerge from bankruptcy.  Most people have unsecured credit cards that do not require you to provide collateral.  A “secured credit card,” is secured by savings account.  You would open a savings account (say for $500) and then have a comparable amount of credit.   As you use the card and pay it on time, you will slowly rebuild your credit score by establishing a payment history with it. After using a secured credit card for about a year or so you should be able to obtain an unsecured card. As you continue making payments on time and using your card wisely, your score will slowly improve.

We represent individuals and businesses  in Durham, Wake, Orange and surrounding counties in North Carolina Chapter 7, Chapter 11 and Chapter 13 Bankruptcies.  You can schedule a free consultation to talk through bankruptcy issues by calling us at 919-313-4636.

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Jim White
Jim White

Jim White helps people and companies facing serious financial injury. He is a Board Certified Specialist in Business Bankruptcy as well as an experience litigation attorney who has successfully taken on banks, large financial institutions and other corporations in “David v. Goliath” cases.