Getting your credit back in shape after a bankruptcy is like starting a new workout regime. You probably feel like you’re out of shape. It can feel daunting to get going again. You may feel a little sore at first.
But you’ve got to repair your credit after a bankruptcy. Think of yourself as Rocky, standing at the bottom of those famous stairs. The climb is hard. It takes effort. But the effort is worth it when you’re back at the top.
Think of me as your personal trainer, pushing you to succeed. I’m not going to let you slack! So get ready to work. Here are some ways you can rebuild your credit post Chapter 7 or Chapter 13.
1. Take an honest look at yourself. That means examining your credit scores through the U.S. government’s free site, AnnualCreditReport.com. You’ll also need to study your FICO score in the months to come. If you see any errors, this is the time to correct them. It may take writing some letters, following up if needed and checking back to see the errors were fixed. Future lending and low interest rates depend on having a clean credit report, so take the time to fix what you can.
2. Find a “workout buddy” at your local credit union. Credit unions are likely to take the time to work with you post-bankruptcy on setting up a secured loan. With a secured loan, you can borrow against the money you already have in the bank. (This money won’t be accessible for your use while you are paying off this loan, so be prepared.) The credit union will send reports about your positive payment history to the credit bureaus, and this will create a positive picture of you as a potential lender.
3. Apply for a secured credit card. This is another credit-building tool that you can use post-bankruptcy easily and effectively. A secured credit card relies on money you have in your account; the credit limit is set to that amount you initially deposited. These cards may have an annual fee or higher interest rates. But this is a short-term fix to get your credit in shape. Check with your credit union or a local bank for these secured credit cards – they’re more likely to work with you to get your credit back in shape.
4. Make a vow to pay off your bills on a regular basis. This is where you need to exert every ounce of discipline, just like following a workout schedule. Pay every bill on time. Keep your credit-card balances low. You need to show potential lenders that you have good credit and you’re a reasonable risk if they decide to lend you money. This may require a budget to ensure you’ve got enough every month to cover your bills.
5. Protect your identity. Every boxer knows that you’ve got to shield your face and body from potential blows from an opponent. The same goes for your identity. You’ve got to redeem yourself in the eyes of financial institutions, so your identity is of the utmost importance. Don’t sign any loans for friends or family. Use cash when you can. Sign up for credit-watch services. And keep an eye out for strange activity on your various accounts. You want to shape your credit and identity just like you’d shape a muscle group.
Every day is another opportunity to work on your credit just as much as you’d work on your health and wellness. It takes effort, but the rewards are substantial. You need to rebuild your credit after a bankruptcy, and the responsibility rests on you and your post-bankruptcy behavior.
By Charissa Potts,
Attorney at Freedom Law, PC