One of people’s biggest concerns when filing bankruptcy is that the process will heavily damage their credit score. While this is a valid concern, we need to point out a significant fact – if you are in financial distress, you are likely already damaging your credit score with no end in sight. Filing bankruptcy can stop the financial bleeding and give you a turning point to begin rebuilding your credit again. This article will discuss some of the top recommendations from bankruptcy attorneys to repair your credit score after your bankruptcy case is over. 

These recommendations are meant to be taken in order, as they progressively work to get you back to where you need to be. 

1. Pay your Bills: The number one way to rebuild your credit post-bankruptcy is to pay all of your bills on time – from rent or mortgage to your electric bill. Paying bills promptly is the most direct way to boost your credit score. You’ll definitely want to avoid any late payments – not only will they hinder your credit score, but they also come with fees and penalties, which you’ll want to avoid under your new financial freedom. 

2. Check Your Credit Report: Get a free copy of your credit report, and look it over carefully. Look for any mistakes or any entries that should have been discharged during the bankruptcy. There are instructions at the end of the report that will inform you how to make corrections. 

3. Choose a Credit Union: While many of us are used to banking with large corporate banks, a local credit union on your way to work is recommended. A smaller credit union often offers several programs to help you build your credit, and having a personal relationship with your banker is also helpful. 

4 Obtain a Secured Credit Card:  With a deposit of approximately $300-500, you can secure a credit card. Be sure to only use the card for purchases that you can afford – such as your weekly grocery trip or filling your gas tank., Use the card, then go online and pay off the charge as soon as possible. This avoids interest and late payments while building credit. 

5. Take Out a Small Loan: Credit unions often offer promotional loans, typically in amounts smaller than $1,000. These are usually seasonal promotional campaigns, such as providing money for spring cleaning projects or Christmas gift buying. Take out the loan, but do not spend the money! Pay it back in full a few months later. You can do this several times a year, which will establish a track record for paying your debts back promptly. Remember your goal – to rebuild your credit, not take on more debt. 

6. Get a Higher Limit Credit Card: After successfully paying back a few small loans, apply for a credit union Visa or Mastercard. This will replace the secured credit card mentioned in Tip #4. Make sure to pay all charges every month, if not sooner. Once you have established a record of on-time payments, request an increase in your credit limit. When your financial institution trusts you with more credit, the credit bureau will respond positively. 

7.  Obtain a Car Loan: Most credit unions offer car loans with favorable terms and discounts if you set up automatic payments through your account. This final step represents a significant loan that should effectively put your credit score back to right, as long as all of your other payments are still being made on time. 

The first step to a fresh start is speaking to a bankruptcy attorney. Richard V. Ellis has helped hundreds of Sarasota area residents to get back on the road to financial freedom. Call today to find out more about your options.