Many clients who have filed for bankruptcy express a sense of relief when everything is settled. They often look forward to getting off to a financial fresh start. One question that clients ask is how they can start to rebuild their credit after the bankruptcy process is complete.
The good news is that just by filing bankruptcy, you may have actually helped your score. Researchers report that credit scores typically plunge in the 18 months prior to filing bankruptcy and steadily rise afterward. One of the major credit scoring companies also reports a bump in credit scores after filing, noting that the average credit scores before chapter 7 filings are in the 530 range compared to 620 after a bankruptcy discharge.
To continue the upward climb, those who have filed bankruptcy may want to consider a credit builder loan. These loans put the money you borrow into a CD or savings account that borrowers can claim after making regular monthly payments for a year. The timely payments are reported to the credit bureaus so that a good credit history can be established once again.
Another strategy to rebuild your credit involves taking out a secured credit card. Typically, you will make a deposit with an issuing bank, say $500, and get a credit line equal to that deposit. Using the card regularly, while trying not to exceed 30% of your limit, and paying off the balance in full each month will help to prove your credit worthiness and, in turn, bump up your score.
Although a bankruptcy will remain on your credit report for many years, using credit responsibly will likely help you to improve your credit score substantially. If you have questions regarding Chapter 7 or 13 bankruptcy protection, contact the Law Office of Charles E. Covey for assistance today.