7 Ways to Improve Your Credit Score After Bankruptcy
Filing for bankruptcy is often a bittersweet experience. On the one hand, your debts are eliminated. You’re given a second chance to achieve financial stability and even success, but on the other hand, it’s usually a long, hard road to getting there. Reading this article is as good a start as any to your new future. Here are some tips to improving your credit score and getting you back on your financial feet!
It’s probably the most simple advice one can give, but it’s one of the most effective methods for improving your credit score after bankruptcy. You won’t have any immediate borrowing power right after bankruptcy, so this is essential in case emergencies come up. Get into the practice of paying by cash and check only. Saving will allow you to build up a down payment for a major purchase such as a car or house, if you need these things. Down payments are imperative for obtaining a loan after bankruptcy, to improve your credit rating.
2. Make payments on time, every time
Rent, mortgage, utilities…they all need to be paid on time, or they will probably be reported. Making regular, on-time payments will keep your score in the neutral zone, but if you’re significantly late on them, you can do serious harm to it.
3. Keep collection agencies away
When your past due balances go to a collection agency, they will report this activity to credit agencies, even for the most minuscule amounts. If this happens to you, don’t hesitate to give the collection agency a call, tell them when you plan on making the payment, and they might wave their notification to the credit agency, just this once.
4. Do not bounce checks
Bounced checks are not reported to credit agencies, but they are tracked internally by banks, and you are likely to be left with some hefty overdraft fees if you get into this habit. If you’ve bounced your share of checks, it probably wouldn’t be smart to apply for a loan through a bank, because it’s likely that they won’t give it to you. If you don’t have the money for a particular payment, simply write the check when you have some cash in the bank, as opposed to writing checks for money you don’t have.
5. Borrow from small, local lenders
Nationwide lenders often run your social security number through their system and automatically decline your loan request based on a general formula. Local lenders might be more willing to help you out if they are familiar with your employer, or know you to be a reliable customer. Try out a credit union. They tend to be community-based, and have a great deal of experience with people who have bad credit histories.
6. Do an annual credit report check
The major credit report agencies are required by law to offer you a free credit report, once every year. If you find an error on your report, make a phone call immediately. If it’s on your report for too long, you may lose the right to have it fixed, and it can end up staying on there for up to 7 years.
7. Don’t get involved with credit repair scams
No agency can “repair” your credit score or erase your real credit history. Nobody can positively impact your credit score, but you. Remember that!