Bankruptcy often does affect your credit score, but let’s face it if you owe debt, it was probably low to begin with. Filing for bankruptcy does provide relief and a fresh start, but it it important to remember it is just a tool to get you that fresh start. That is why at Tomes Law Firm, our bankruptcy attorneys enroll you in a credit rebuilding class that we pay for to help you stay on track for a more successful financial future. You can rebuild your credit after bankruptcy, and it may take less time than you think. Some of our clients have seen an increase of 100 points in as little as six months.

Why is an increase in your credit score important?

An increase in your credit score will make it easier for you to obtain credit in the future for a home or a car, and more importantly a lower interest rate. Reports have indicated that increasing your credit score by 100 points can drop your interest rate by 2%, lowering your monthly payment.

Here are some tips on how to get started increasing your credit score:

• Check your credit reports: The first step is to get a copy of your credit reports from all three major credit bureaus: Experian, Equifax, and TransUnion. You can get a free copy of each report once per year at AnnualCreditReport.com. Review your reports carefully for any errors or outdated information. If you find any errors, dispute them with the credit bureaus immediately.
• Make on-time payments: One of the most important things you can do to rebuild your credit is to make all of your payments on time. This includes your rent, mortgage, car payments, and credit card payments. If you are struggling to make payments on time, contact your creditors to see if they can work with you on a payment plan.
• Keep your credit utilization low: Your credit utilization ratio is the amount of credit you are using divided by your total available credit. It is best to keep your credit utilization below 30%. This means that if you have a total credit limit of $10,000, you should keep your outstanding balance below $3,000.
• Get a secured credit card: A secured credit card is a type of credit card that requires a deposit. Your deposit will serve as your credit limit. Secured credit cards can be a good way to rebuild your credit if you have been denied for a traditional credit card.
• Become an authorized user on someone else’s credit card: If you have a friend or family member with good credit, you can ask them to add you as an authorized user on their credit card. This will allow you to benefit from their good credit history, as long as you make all of your payments on time.
• Create a budget and stick to it: This will help you to avoid overspending and make sure that you have enough money to make all of your payments on time.
• Avoid opening new credit accounts too quickly: Each time you apply for a new credit account, a hard inquiry is placed on your credit report. Too many hard inquiries can lower your credit score.

Rebuilding your credit after bankruptcy or even without bankruptcy takes effort, but it is possible. By following these tips, you can start to improve your credit score and get back on the road to financial stability.