Tips to Rebuild Credit after Bankruptcy
If you feel like you are being smothered by a crushing mountain of unbearable debt, you may feel like bankruptcy is your only option. After all, when you file bankruptcy, you instantly get rid of your debts and get relief from those harassing phone calls from creditors.
However, the disadvantage of taking this drastic step is that it will remain on your credit report for 7 to 10 years. This can cause creditors to question whether or not it’s worth the risk to extend you credit.
Of course, don’t feel like you have failed and there’s nothing you can do for the next 7 to years. There are actually several things you can do to improve your credit while the bankruptcy is still on your report.
5 Steps to Rebuild Credit
Just because you have a bankruptcy on your credit report doesn’t mean you’re a lost cause. Below, we’ll take a closer look at 5 simple steps you can take to rebuild your credit.
Know Your Current Credit Status
The very first thing you must do to rebuild your credit is to get copies of your credit reports from the three national credit bureaus: Equifax, Experian, and TransUnion. You can visit annualcreditreport.com to get a free copy from each one. The order process is easy and secure.
Once you’ve ordered copies of your reports, print them out and carefully review them. Try to understand what is listed on your reports and be sure to highlight negative records and/or inaccuracies that could be bringing your score down.
Check Expiration Dates
By law, bad marks on your credit report remain for 7 to 10 years. However, the expiration dates will vary from one credit bureau to the next.
Check the expiration date of each judgement, charge-off, bankruptcy, lien, collection records, and late payments. Chances are, when those things expire and come off your reports, you will see your credit score increase.
Request Corrections on Inaccuracies
If you do happen to find any inaccurate records, expired records, or fraudulent accounts on your credit reports, you have the right to send dispute letters to each of the credit bureaus.
P.O. Box 740256
Atlanta, GA 30374-0256
P.O. Box 4500
Allen, TX 75013
TransUnion Consumer Solutions
P.O. Box 2000
Chester, PA 19016-2000
Once they receive your dispute letter, they will initiate a 30-day investigation to determine whether your dispute is valid. If it is found to be valid, you will receive a letter and the record will be removed from your report. On the other hand, if your dispute is not valid, the record will not be removed, and you will receive a letter informing you of the status.
Please note that you do not want to dispute positive information listed on your credit reports. This will be a waste of your time- not to mention, when you dispute positive records on your credit reports, it could actually damage your credit score.
Start Building Good Credit
Since you can’t remove bad records from your credit report, the best way to improve your score is to focus on building good credit. The easy way to do this is find a bank that extends credit to help people rebuild their credit after bankruptcy.
Once you are approved for a credit card or loan to rebuild your credit, you will want to make sure that you’re using it responsibly and making monthly payments on time. This will help you improve your payment history and credit use profile- which will ultimately improve your credit score.
When you start seeing improvement, you might want to consider opening new accounts or even getting a loan to improve your score even more.
Monitor Your Progress
Consider subscribing to a credit monitoring service or software. This will help you keep a close eye on your progress. You should begin to see an improvement in your score after a couple of months- and it should steadily increase as you add more positive records to your reports.
Bankruptcy may be your only way out from under the crushing mountain of debt you’ve found yourself under. While this will get rid of that debt, the record will be added to your credit report for the next 7 to 10 years. However, this doesn’t mean that you’re a lost cause. There are some things you can do to improve your credit score while you wait for it to expire, including those listed here.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2021 Krista Mounsey