Congratulations! You have made your way through bankruptcy and are ready to begin your new financial life. Or… you are contemplating bankruptcy and you want to know what steps to take in the future to avoid the financial struggles you face now. Now matter where you are in your bankruptcy journey, there are a few things to avoid if you want to get your credit score back into shape.
Getting a New Phone
If you are one of the millions of people who use a cell phone exclusively to communicate, you will want to stick with whatever carrier and phone you currently have, even if it means some inconvenience. And if you were thinking about making the switch to cellular, now is not the time. Most cell phone companies pull your credit report when you apply to do business with them and this type of hard inquiry affects your credit report in a negative way. The damage is relatively mild, so if you have no other option it’s not the end of the world. However, if you can postpone your new phone, do so until your credit is in better condition.
Renting a Vehicle with a Debit Card
If you are in need of a rental car, your situation might be a bit of a challenge financially. Many rental companies do allow you to rent with a debit card, but when they do so they run a credit check. Again, credit check damage your credit score. If possible use a credit card to rent your vehicle. It might require some research, but you could also find a company that does not run a credit check when you use your debit card.
Failing to Use Your Credit Cards
If you have begun moving forward after your bankruptcy and have applied for a credit card, it is important for you to use it. Ideally, you will use your card for small purchases and pay off the balance each month. This helps you rebuild credit. By not using your card, you run the risk of the credit card company closing your account due to inactivity. This does not cause serious harm, but every point of improvement helps you.
Disputing a Charge on Your Credit Card Bill
This is a tough one because if there is a mistake on your bill you want it corrected, right? Unfortunately, a dispute can cause this available credit to not show, creating a lower score. This is not a long-term problem. If you need to dispute a charge, make sure you remedy the problem long before you need your credit score to provide an accurate reflection of your current situation.
For more information on your rights as a consumer and how to dispute charges on your bills, visit the Federal Trade Commission website.
Financing Large Purchases
As mentioned above, it is important to use credit in small chunks to build your score. What you should not do is finance a large purchase. Many retailers offer great deals when you finance, but these deals create more harm than good in the long run. You could end up paying more for the item and it affects your credit. In most cases, you are approved for the amount of the item, which means the moment you make the purchase you have maxed out a line of credit. This counts against you when your credit score is calculated.
Closing Old Credit Card Accounts
Closing old accounts might seem smart, but it reduces the amount of available credit you have. You shouldn’t have a dozen cards open, but you should keep the oldest of your cards open and use it responsibly on occasion. View your oldest card as a credit asset that can help you rebuild your score.
Recovering from bankruptcy can be challenging, but it is possible to have a bright financial future after you have filed. The important thing is to make the right choices starting now, from the moment you begin the bankruptcy process. And remember, when you are rebuilding credit, every single point in your favor counts.
If you have questions about bankruptcy or you need assistance getting things in order for the future, contact the Law Offices of Robert M. Geller at 813.254.5696 to speak with someone about debt collection and money management.