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When clients first come to us for help there are many important things weighing on their mind – keeping a house, better terms on a car, facing a lawsuit. These are all serious and necessary questions to discuss with your attorney prior to filing. However sometimes clients are concerned on something that is not as important at that time as they may think – their credit score. Credit scores are flashy. There are a lot of commercials advertising ways to obtain your credit score and what it means. However, if you are facing a bankruptcy, your credit score is not as important as you may think. As we tell clients – we are here to help you get out of debt, not be worried about how to obtain more debt. But after your discharge, it is time to think about your credit score and how to improve it. Bankruptcy should be a blip on your past radar, not an anchor that hangs around you for the rest of your life. With that in mind, there are some basic things you can do to improve your credit score after you receive your discharge –
- Pay your Bills
It may seem simple, but credit is built by timely payments on bills – all bills. Pay your electric bill, pay your gas bill, make your car payment if you reaffirmed your car, make your mortgage payment if you saved your house in a Chapter 13. Creditors’ reports can be good or bad. Make them good with your actions.
- Explore re-financing
This will only apply to those individuals who filed a Chapter 13 and saved their house. After Bankruptcy your credit report will show a bankruptcy, but it will also show that your debts have been discharged. It’s time to get better terms on the debt you retained. By dropping your interest rate you will not have as large of a financial burden, and the discharge may free up some much needed credit that will make your re-financing options more attractive to banks.
- Obtain a small loan and put it in the bank
As I said before, you rebuild credit by paying your bills. Go to a local bank or credit union and obtain a very small loan, and then don’t spend it. Put it in the bank and repay the loan as the terms go along. You will be out the interest, but that will be minimal. The principal will simply be repaid to the bank. When you are done, the bank will report that you took out a loan and repaid it. Instant credit improvement!
