How To Repair Your Credit Record After Bankruptcy (Step-By-Step Guide)

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Are you concerned about how you are going to fix your credit after becoming bankrupt? You may be wondering if it will even be possible.

Thankfully, we are not only going to tell you that it is possible, but we are also going to show you how you can do it.

How to Repair Your Credit Record After Bankruptcy (Step-by-Step Guide)

In this article, we have put together a step-by-step guide on how to rebuild your credit record over the course of time.

A Step-by-Step Guide to Repair Your Credit Record Following Bankruptcy

Below, we have listed ways to slowly but certainly repair your credit score after you have declared bankruptcy. While these steps may not make a difference overnight, you will certainly begin to notice improvements as long as you stick to completing them.

Continue Making Consistent Payments Through your Usable Accounts

After declaring bankruptcy, the first thing you must do is figure out which accounts were cancelled and which ones weren’t.

The majority of your debt is erased via bankruptcy, however there will normally still be some remaining debt which needs to be paid back. This debt could take the form of child support payments, mortgage or college debts.

By completing all of your payments for these outstanding bills on schedule and, if possible, in full, you can start the process of restoring your credit after bankruptcy.

The key to establishing good credit is making timely payments, and the lower your credit use ratio, the faster you can begin to rebuild your credit.

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Keep on Top of Current Credit Card Payments

Your payment history serves as the most crucial aspect of your credit score, as we have mentioned. Making on-time payments when you receive new credit is vital, particularly following bankruptcy, as delinquencies may further lower your credit score.

You may gradually rebuild your credit and establish your dependability by making on-time payments.

Paying off your card several times throughout the month, scheduling alerts to make a payment, and organizing your financial affairs to assist you wipe off the full outstanding balance are just some ways to remain on track of your payments.

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Maintain a Stable Job

Your credit score won’t be directly impacted by constantly changing careers, but it may have a long-term impact on lenders.

Given that you will need to be capable of repaying whatever loan you are given, lenders are going to want to verify that you’re making a living from a steady source of income. Changing jobs frequently will give the impression that you are untrustworthy.

Lenders will evaluate your salary and your current and previous employment over the last 24 months. They will also evaluate your credit rating, and other variables when considering your request for new credit or a loan.

Therefore, maintaining a steady job will benefit you because it will increase the lender’s faith in your capability to repay the loan even after filing for bankruptcy.

Make New Credit Applications

Sadly, it is often more difficult to obtain new credit following a Chapter 13 or Chapter 7 bankruptcy than prior to it. At this time, rates of interest and costs might be increased, which would make it even more difficult to get accepted for new credit.

But, establishing new credit is one way to repair your credit after bankruptcy.

To demonstrate that you’re a trustworthy borrower following bankruptcy, it’s imperative that you apply for new credit. You can begin observing your credit repair by establishing a solid record of on-time repayments.

When you are having trouble with your creditworthiness, applying for a secured credit card, obtaining a credit builder loan, starting a smaller loan, and/or employing retail and gas cards are all excellent options.

One way to help repair your credit is to purchase a tradeline. This adds the credit history of a seasoned, positive account to yours.

Tradeline Supply Company sells these, allowing you to purchase a tradeline and help repair your report and improve your credit score.

Be Cautious When Applying for Credit Applications

A hard inquiry is made into your credit record in response to every new loan application. Lenders view too many frequent inquiries in a relatively brief amount of time as hazardous conduct, which might harm your credit.

Their restrictions might be too stringent for your present credit file if you’re consistently rejected for new credit cards.

Maintain a watchful eye on your score and be conscious of the underwriting requirements of the issuers, so you can make more informed credit applications.

You could also apply for an authorized user credit card or a secured card. Furthermore, you can register for a program that notifies the credit bureaus of your payments.

Over time, establishing a stronger credit history boosts your likelihood of getting authorized for credit cards with more stringent restrictions.

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Consider Acquiring a Cosigner/Registering as an Authorized User

After bankruptcy, being a cosigner on a loan or lease contract may increase your likelihood of being approved. In the event that you default on any payments, a cosigner will stand in as your legitimate financial supporter.

Even with a cosigner, you can still be authorized for credit in your name, and keeping up with your repayments on these accounts can still raise your credit rating.

Additionally, you might apply to make use of another person’s line of credit as an authenticated person. A member of the family or acquaintance may be happy to add you to their credit card account if you ask them to.

As a result, as long as the credit card issuer confirms payments to the credit agencies, they should appear on both your credit record and their’s.

This simple act of registering as an authorized user on someone’s credit card is an excellent way to repair your credit after bankruptcy.

Request That the Credit Bureaus be Notified of Your Payments

It is crucial that you ask your creditors and lenders if they can disclose your activities to the bureaus on your behalf, given that they’re not automatically required to do so.

Any lender or creditor you engage with following bankruptcy must preferably provide a statement so that your good behavior is noted. This will help improve your rating.

Even payments that aren’t associated to credit, including rental and utility bills, might be disclosed to the credit bureaus. And in turn, these can help repair your credit after bankruptcy by raising your credit score.

Despite the fact that not all credit scoring models take these transactions into account when determining your score, having this additional credit information as a portion of your payment history won’t do you any harm.

Maintain Minimal Balances in Your Accounts

When you have a low credit card balance, you are utilizing a lower portion of your total credit limit. When you are working so hard to correct it, having a higher balance will reflect poorly on you and could lower your score.

As a result, credit experts will advise sticking with a credit usage ratio of under 30%. One sign that you will pay back what you borrow is a low credit utilization percentage.

Monitor Your Credit Report to Ensure Accurate Recordings

Your credit is severely harmed by bankruptcy, but unfortunately there are opportunities for mistakes that worsen the issue. For instance, showing debt as ongoing or overdue rather than cancelled could affect your credit reports even more.

This is why, following bankruptcy, you must be vigilant about reviewing your free credit reports. It is important to contest any inaccuracies as promptly as you discover them.

Users commonly become aware of incidents of inaccurate and unjust credit reporting. Take note that a Chapter 13 bankruptcy is removed from your record after seven years, and a Chapter 7 bankruptcy is removed after ten years.

Final Thoughts on Repairing Credit After Bankruptcy

As long as you are careful with your expenditures, keep an eye on repayments for whichever credit you are able to take out, and keep your account balances low, you will begin to slowly build your credit back up.

The key here is to be responsible for your spending, and being cautious about repayments and expenditures. Keep at it, and you will slowly but certainly begin to see a positive change in your credit.

We hope you found this article helpful.