How to rebuild your credit after bankruptcy.

Almost anyone can get credit soon after a bankruptcy. It’s just a matter of knowing how.

It’s true that bankruptcy deals a devastating blow to your credit and your credit score, the three-digit number lenders use to gauge your creditworthiness. But the effects don’t have to be lasting.

Long before the bankruptcy drops off your credit report, you could be qualifying for loans with good rates and terms.

Nothing is forever

Ken from Chicago filed Chapter 7 liquidation after unemployment and overspending caused him to rack up more than $20,000 in credit card and other unsecured debt. Four years later, his credit scores ranged from 655 to 719, decent numbers that are just below the cutoff to get most lenders’ very best rates.

“I . . . applied for a secured credit card (usually reserved for people with troubled credit) and was informed that I qualified for an unsecured card — a possibility I hadn’t even considered,” Ken said. “While I am going to be very careful with my new credit (card), I am heartened that creditors consider me an acceptable risk.”

Two things to keep in mind

  • Nothing in credit is “forever.” A bankruptcy legally can remain on your credit report for up to 10 years, but its effect on your credit score can start to diminish the day your case is closed — if you adopt responsible credit habits such as paying your bills on time, using only a small portion of your available credit and not applying for too much credit at once.
  • You have to get and use credit to build your credit score. Living on a cash-only basis may be a smart choice for those who really can’t handle credit. But if you want to rebuild your credit score, you can’t sit on the sidelines.

Clean up your credit report

One common problem people emerging from bankruptcy often face is that credit reports frequently show accounts as open and overdue — when in fact they were closed and the obligations wiped out as part of the bankruptcy.

If you encounter this, you need to contact the credit bureaus and insist that those accounts be properly reported as “included in bankruptcy.” It’s the only way your credit can recover.

If you have other serious mistakes on your credit report, those need to be corrected as well. Your credit score is based on information in your credit report, so errors on your report can seriously dampen your score.

Get a secured credit card

You need two types of credit to quickly rebuild your credit score:

  • Installment: auto loans, student loans or mortgages
  • Revolving: credit cards or home equity lines of credit

Schwilm & Lezman, P.A. Bankruptcy Attorneys can answer all your questions and assist you with creating a solution that works for you so you can rebuild your life. Call us for immediate legal assistance at (704) 567-3824 for our Mooresville office . Our experienced attorneys can help you get debt free in these areas: Mooresville, Mount Holly, Gastonia, Gaston, Iredell, Statesville, and Belmont.