Many people are (inaccurately) told that bankruptcy will ruin their credit for 7-10 years after it has been discharged. This is a complete myth, and one that needs to be busted as soon as possible. The reality is, as soon as your bankruptcy is discharged, you can begin working on building your credit score again. Within a matter of months, you can have a much stronger score and before you know it, you will be in an exceptional financial position. The following steps can really help you to boost your credit fast after a bankruptcy.
Get a Secured Credit Card
As soon as you can after your bankruptcy, apply for a secured credit card. These cards are easy to qualify for since they are secured by a cash deposit. When it comes to boosting your credit score, however, they are treated essentially just like a traditional credit card. If you pay off what you owe each month, this will establish a good track record that will only improve over time.
Monitor & Update Your Credit Report
You need to start looking at your credit report regularly, and disputing any problems that may be present. People are often shocked to learn just how often inaccurate information gets into their credit reports and hurts their score. Monitoring your report will not only give you the ability to dispute inaccuracies, but also identify fraud or other problems much earlier than would otherwise be possible.
Create a Checking and Savings Account
If you don’t already have one, make sure you create a checking and a savings account with a local bank or credit union. These accounts are convenient and will become well-aged financial accounts over time, which will help your credit score. Having even a modest amount of money in savings will also help to boost your credit as it shows responsibility.
Open a Credit Card (and Keep the Balance Low)
Within a short period of time after your bankruptcy, you’ll likely be able to qualify for a low balance (under $500) traditional credit card. Initially, the interest rate may be high, but that won’t matter at this point. For now, you simply want the card active, and you want to pay it off each month. By paying off the full balance each month you won’t actually pay any interest at all. This will help boost your credit score quicker than many would imagine.
Keep Accounts Open
One of the things that has a big impact on your credit score is the length of time your accounts have been open. While it may be tempting to close out accounts after a bankruptcy, it is much better to keep them open. Older accounts can really help to increase the average age of credit, which will boost your score fast.
If you’re concerned about the impact a bankruptcy will have on your credit – don’t be! There are a lot of misconceptions out there from people who don’t realize the benefits a bankruptcy can provide. If you have any questions or concerns, reach out to the attorneys at Cutler & Associates who specialize in bankruptcies and can give you honest, straightforward answers. Contact us today to schedule a consultation.