In Part 1 of this series on tips for fixing your credit rating after a bankruptcy, we talked about the first steps to take to get your financial affairs back in order. Building your credit back up, as we discussed, involved gathering your credit reports, disputing negative comments and errors on your credit reports, and using kindness to your advantage to try and get negative credit report remarks removed, and jumping back into using credit cards.
If you’ve taken the initiative and you’ve done the first four steps, chances are your credit score has gone up. Now, let’s take a look at getting you back to where you can use your credit rating to buy a house, a car, or whatever big ticket item is near and dear to your heart.
Steps to Take to Repair & Build Credit and Improve Your Credit Score
Taking Care of Outstanding Debt & Balances – There are some balances that won’t get forgiven by going through bankruptcy. This is called non-discharged debt, and you’ll still be required to pay it off. Examples of non-discharged debt include: child support and alimony; court ordered fines, penalties, and restitution orders; back taxes; medical bills; debt arising from car accidents or driving while under the influence; money owed for signed contracts or leases; promissory notes; and student loans. If need be, you may have to sell of some assets (motorcycle, bike, boat, etc.) to be flush with cash, so you can pay down outstanding debt.
- Getting a Credit Co-Sponsor – This is an old strategy that is quite efficient. Basically, have a spouse or a relative put your name as an authorized credit card user on their account, and you’ll reap the benefits of their good credit practices. Conversely, if they fall behind on payments, you also reap their bad credit behaviors, too. So, make sure the person you join an account with keeps sterling financial practices.
- Retain Old Credit Cards – Just because you used and abused one or more credit cards in the past, doesn’t mean they can’t be given a new life and purpose. If you’ve had a credit cards for several years, and then close that account it could very well impact your credit history, as well as take your credit score down some notches. The best strategy here is to get rid of the newest credit cards, and hold on to the oldest one. Put it in a secure place, if you don’t want to use it – the point is it still has credit rating value.
- Prioritize Paying Your Bills – The goal here is to always pay your bills on time. However, in the aftermath of a bankruptcy, it’s important to prioritize your bills should you have a set back again and can’t pay everything on time. Remember, there are some bills that probably aren’t connected to credit services or won’t get you fed to the collection sharks. Those include things like utilities, water, trash, etc. You can probably chance falling behind one month or so on those, but take care of the mortgage and credit cards first, because the minute they are late the credit bureaus are notified.
Lastly, once your credit score is hovering above 700, then you are officially back with a decent credit score. If you worked your way back to a decent credit rating so that you could buy a big-ticket item, like a house or a car, then you’ll want to be vigilant about finding the right deal. You’ll need to weight the “pros” and “cons” on taking a variable-rate loan versus a fixed-rate loan. It might even help to seek legal counsel on big-ticket item purchases to see if you are ready for that undertaking.
Contact a Westminster Bankruptcy Attorney with Garcia & Gonzales, P.C.
Have you exhausted all efforts to salvage your credit and feel the only way to a fresh start is bankruptcy? If so, contact a Westminster Bankruptcy Attorney with Garcia & Gonzales, P.C. to see how our legal team can best be of service in getting you back to a clean slate and out of debt. Remember, not all debt can be forgiven, but we’ll assist you on the best strategy to move forward.
To speak with our Westminster Bankruptcy attorney today, call 303-839-8888 or use the contact form on our “Contact Us” page.