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Rebuilding Credit After Bankruptcy

Growing up, people worry about their grades in school and how they will impact their futures. As adults, those same concerns carry over to our credit scores. This all-important metric impacts everything from your ability to explore new opportunities to the lifestyle you and your family lead.

That is why, if you are considering filing for bankruptcy protection, the impact of this decision on your credit scores is likely a primary concern. Questions about how expensive credit will be to maintain in the future and when your finances can return to normal are likely at the top of your list.

Here are the steps you can take to begin rebuilding your credit after bankruptcy.

Reestablish a Positive Credit History

Make no mistake, bankruptcy will significantly impact your credit score immediately after filing. The key, however, is to view this event as a clean slate. Your job going forward is to reestablish a solid credit history to build a bank’s confidence in your ability to repay debts.

Here are a few steps you can take immediately after bankruptcy to begin the process of rebuilding your credit:

Obtain a credit card. Using a credit card and paying off the entire balance every month is one of the best immediate steps you can take to begin rebuilding your credit after bankruptcy. Though you may not qualify for a regular credit card, putting down a cash deposit for a secured credit card can help get you back on track. Just be sure to keep your balance paid to keep high interest payments from eating up your savings.

Keep your debt balance low. Once you obtain a credit card, make sure you are not utilizing it to its maximum level. Having a high debt to income ratio signals to financial institutions that your finances are in disarray. To avoid any impact of high debt levels on your credit score, try to keep your debt utilization at less than 30 percent. Monitor your credit score. These days, it is easier than ever to keep a handle on your credit score. Multiple websites offer free monitoring of scores over time, with email alerts for any activity. You’ll want to monitor your score regularly and be on the lookout for any inaccurate information that could negatively impact your rating.

Reestablishing a credit rating takes time. It will take seven to ten years for your bankruptcy to be completely wiped from your record. But by avoiding future mistakes and keeping your finances balanced, your bankruptcy will begin to make less of an impact on your rating.

Exploring Different Bankruptcy Options

The circumstances surrounding your bankruptcy and what type of bankruptcy you file, be it Chapter 7 or Chapter 13, can impact the scale and time to which your credit scores are affected. By working with an experienced Houston bankruptcy attorney, you can determine the best path forward to discharge your debts and protect your ability to obtain credit in the future.
To discuss the potential impact of your bankruptcy on your credit scores, contact Kealy Law today. From our Houston office, we help families and businesses in Houston and throughout Texas move forward through bankruptcy protection options. Call us at 1-970-776-9504 to set up a meeting.