Filing for bankruptcy can give you a fresh financial start, but it will take a while to rebuild your credit. Some of these tips from a Montgomery County bankruptcy lawyer might help the process go a little bit faster. Here’s our advice on how to make the most out of this reset for your finances.
Can a Credit Card Help You Rebuild Your Credit?
A credit card can help you rebuild your credit after you go through bankruptcy, but there are some important things to be aware of. First of all, you’re going to have a hard time getting a card with a high limit or low interest rate. You may need a secured card that you back up with your own deposit. This will let you build up your credit over time though, so it’s still a useful tool.
You can also sign on to be an authorized user on someone else’s credit card. This does tie you to someone else’s habits though. If they do not make payments on time that could adversely affect you, so be careful about who you ask.
There are also credit-building loans that you can apply for. Pay these off over time and you will see your credit score continue to improve. Eventually, you will be able to apply for other loans and lines of credit.
Which Good Habits Can Help You Rebuild Your Credit?
Once you have a line of credit, loans, and other things that can help you rebuild your credit, you need to establish good habits and stick with them. We recommend:
Sticking to a budget: Once you can apply for loans and additional lines of credit, you do not want to overextend yourself. You could end up in bankruptcy court again if you are not careful. Having a budget also helps because having a low credit utilization can improve your credit score. If you are utilizing most of your credit, that can make some lenders think that you are overextended.
Don’t apply for everything: It can be attempting to apply for more lines of credit when you are trying to rebuild, but that can be a bad plan. This is because many lenders submit a “hard inquiry” when checking your credit. Repeated hard inquiries in a short period of time can lower your credit score.
Pay on time: A record of on-time payments can help boost your credit score. Late payments can result in penalties, fees, and a ding to your credit.
Contact Our Bankruptcy Attorneys
If you are considering filing for bankruptcy, contact Mudrick & Zucker. We can tell you more about this process and help you figure out if this is the right solution to your financial issues. An experienced attorney is waiting to hear from you.
