A lot of people are afraid of bankruptcy because they worry that they’ll never rebuild their credit again – but that’s a misguided fear.
Bankruptcy will show on your credit record for seven years if you file Chapter 13 and 10 if you file for Chapter 7, but its impact on your credit may be negligible after just one or two years if you take the right steps. These include:
Apply for a secured credit card
Secured cards can often be obtained through your current bank or credit union. Your spending limit will be equal to whatever cash deposit you make, and that money serves as a guarantee of payment in case you default. Use the card regularly for small purchases, paying off the balance each month so that you can show responsibility. After a few months to a year, you may qualify to transition to a regular (unsecured) credit card.
Gradually increase your credit limit
Your credit score is a complicated calculation that takes into account both the reliability of your payments and the amount of credit you have available. Ideally, you always want to keep your credit use ratio below 30%, so work on slowly increasing the credit you have available. Once you have an unsecured credit card and have used it responsibly for a few months, open a second one.
Monitor your credit regularly
Keeping an eye on your credit record with Experian, Equifax and Transunion can help you spot problems and understand the impact of your financial moves on your credit over time. You should also be on the watch for any discharged debts that suddenly pop back up on your record in error.
Bankruptcy isn’t nearly as bad for your credit as cards that are overdrawn and accounts in collection. Call the Quinn Law Firm at 814-833-2222 to discuss your debt relief options.
