After your bankruptcy discharge, you may fear that your credit score will never recover. Don’t let this common misconception stop you from filing, because rebuilding your credit after bankruptcy may be much easier than you think.
In Utah, bankruptcy can remain on your credit report for up to 10 years. The effects of bankruptcy on your score will fade over time. And if you follow a few simple steps, you can accelerate the credit rebuilding process and recover much more quickly.
Create a Post-Bankruptcy Budget and Stick to It
The first — and most important — step to rebuilding credit after bankruptcy is to take control of your finances.
This starts with creating a budget. Your pre-discharge bankruptcy credit counseling course will provide a variety of helpful tips and strategies for developing good spending habits. Use this information to determine how to best manage your money.
However, your budgeting plan won’t mean a thing if you don’t stick to it.
After your bankruptcy is discharged, you must be extremely vigilant about paying all of your bills on time every month. Even one derogatory or negative mark on your credit report over a late or unpaid bill will hinder your efforts to rebuild your score.
Get a Secured Credit Card after Bankruptcy Discharge
The only way to rebuild a solid credit rating is to use credit. A secured card is one of the best ways to re-establish your financial footing after your bankruptcy is discharged.
A secured card will require a deposit, which is typically used to determine your credit limit. This type of card can carry a high interest rate as well as an annual fee. You’ll need to carry a small balance forward each month to establish your credit, but be sure that you never charge more than you can pay back in a month.
If you make on-time payments for 12 to 18 months, you will soon be able to qualify for an unsecured card with more favorable terms.
Monitor Your Credit Reports Diligently after Bankruptcy Discharge
The federal Fair Credit Reporting Act gives you the right to a free copy of your credit report from each of the three major reporting companies every 12 months. Keeping an eye on your report is crucial to rebuilding a solid score after bankruptcy.
Get a copy of your report as soon as your discharge is official, and check to make sure that every debt included in the bankruptcy shows a zero balance. Make sure your report is always up to date and accurate by requesting free reports every year. Any time you notice an error, immediately correct the discrepancy with the creditor and the applicable reporting agency.
The experienced bankruptcy attorneys at Lewis Adams & Associates can assist you in the bankruptcy process, but you must protect your financial position once it’s over. We are conveniently located in West Jordan, Utah, serving clients throughout the Salt Lake City area.
Contact us today to schedule a complimentary consultation. We look forward to answering your questions about Utah bankruptcy discharge and filing.