Once the court closes your bankruptcy case, you’ll want to review your new financial circumstances and make a strategy for moving forward. While your bankruptcy can stay on your credit report for up to ten years, you can improve your credit in much less time by taking the following actions.
Review your credit report
Your credit report should reflect your post-bankruptcy status. All of your discharged accounts should show a $0 balance and be identified as “discharged.” Verify the bankruptcy filing date, as well, as this impacts when the bankruptcy is removed from your report. If discharged accounts are still identified as “active,” notify the credit reporting agency.
Find and dispute errors
Back in 2013, an FTC study found that “five percent of consumers had errors on one of their three major credit reports that could lead to them paying more for products such as auto loans and insurance.” In fact, erroneous reporting is so common that consumer advocates in the House have taken up the cause in the ‘Comprehensive Consumer Credit Reporting Reform Act of 2019.’ Set a task reminder to review your credit report quarterly in order to find and dispute potential errors before they become a problem.
Implement a budget
People often wind up in bankruptcy proceedings because they’ve avoided looking at their financial circumstances squarely. One of the payoffs of bankruptcy is an education in money management and a more clear-eyed approach to finances. Use the information you gathered during your pre-discharge credit counseling to create and implement a budget to ensure you stay on top of your payments moving forward.
Start an emergency fund
Nearly 7 in 10 personal bankruptcies are connected to healthcare costs. People aren’t necessarily living beyond their means or making unwise spending decisions. In most cases, they’re responding to a medical crisis. As difficult as it is to put money aside, building an emergency fund can provide a buffer during times of financial hardship and protect your growing credit score from the unforeseen. Include a monthly deposit into your emergency fund in your budget.
Build new credit
Bankruptcy gets rid of unmanageable debt, but a reasonable amount of debt is necessary to rebuild your credit. A secured credit card, retail card, or credit-builder loan allows you to start building your credit with a small loan amount. As you practice responsible debt management habits like maintaining low balances and making payments on time, you’re re-establishing your credit.
Keep working
Lenders look at more than your credit history when making decisions. Your employment history also influences their perception of your credit-worthiness. While you’re building your credit, it’s important to also build your reputation for reliability. Holding a steady job for several years demonstrates your stability and builds trust with lenders.
Give the Law Offices of Jeffrey Lohman a call today to start your journey towards better credit.
The Law Offices of Jeffrey Lohman, P.C. is considered a debt relief agency pursuant to federal law. We are attorneys who help people file for bankruptcy relief under the Bankruptcy Code.