Life after Bankruptcy: Repairing Bad Credit

Bankruptcy is often touted as a fresh start following a tough financial phase. It is true – life does go on after bankruptcy and if you truly want to make the most of the experience and enjoy a fresh financial start, there are a few things you should know. There is no sense filing for bankruptcy if you are not going to use it as a learning experience and do the work it takes to get your credit back on track.

Applying for New Credit

Your first instinct after a bankruptcy might be to avoid credit all together. Unfortunately, this isn’t going to do you much good if you are hoping to rebuild your credit score. Lenders need to know your situation has changed and that you are now a good risk. If they have nothing by which to measure your risk other than your pre-bankruptcy credit habits, they will assume nothing has changed.

The key to re-establishing credit is to start slow and make smart choices. You will have limited credit card options, but it is still important to understand what is available and make the best choice. Research your options before applying because you do not want to submit a bunch of credit card applications just to see what happens. Every credit card application affects your score, so you are better off submitting just one for which you feel confident you will be approved.

Avoid credit card gimmicks that target people with bad credit. These cards have astronomically high interest rates and fees. Also keep in mind prepaid cards do not report to the credit bureau.

It is also important that you determine why a credit application was turned down. You might assume it is related to your bankruptcy and weak credit score, but there could be another reason. You can remedy the problem before applying for another card.

Managing Credit Wisely

Once you are approved for a new credit card, you need to be responsible about using it. Making purchases you cannot afford and paying only the minimum amount due on your card each month is not going to help you rebuild credit. It is important to keep the total amount owed on your card below the credit limit and pay the bill on time, preferably in full each month.

In addition to managing your new card wisely, you should also use care in managing your other payments. Missed payments on utilities, medical bills, and various fines can be reported to the credit bureaus, so you want to make every effort to stay within a budget and pay everything when it is due. To learn more about managing your new credit wisely, read this article.

Bankruptcy is an opportunity to turn your financial life around, but filing alone is not enough to make a difference. You must also work to rebuild what was damaged.

If you would like to know more about bankruptcy or you have questions about how your life will look after bankruptcy, we’re happy to help. Contact the Law Offices of Robert M. Geller at 813.254.5696 for more information.