So, once I filed bankruptcy how do I restore my credit?
Bankruptcy does impact your credit score which is a gauge of how credit worthy you may be. Scores are drawn from information in monthly reports in the major Credit Reporting Agencies; TransUnion, Experian and Equifax. They reflect your credit history and in turn adjust your scores.
A bankruptcy filing remains in the credit reports for a maximum of 10 years. That does not mean you must have a bad score for that long. Your goal will be to create a new credit history post-bankruptcy. This is achieved through a combination of financial discipline and luck.
The discipline is to never pay a bill late. The credit reporting agencies keep close track of whether bills are paid on time. The luck part relates to whether you have the funds on hand to make those payments. Life “happens” and there will be months where un-foreseen expenses arise. If you have saved for such a rainy day your credit history will not suffer. If income and expenses are beyond your control, then poor credit will remain regardless of bankruptcy.
A thoughtful plan for creating your post-bankruptcy credit history is best. It may include:
Join a local Credit Union ~ get to know them
A modest loan that is paid on time and paid off early
Reasonable use of credit cards – yes they can be had after bankruptcy
Careful review of credit reports six months after the bankruptcy is over
(looking to “scrub” them from errors, such as a debt still listed as owing)
A Warning. There is a lot of useful information on the Internet on strategies to improve your scores. Beware, however, of any firm that claims it can eliminate your debts and fix your scores without bankruptcy. Most often this is a scam. Be particularly wary of any firm that requires a fee or wants you to pay into a fund prior to working with your creditors. These firms have no power to force your creditors to forgive a penny and most often will take your money with no results.
Professional advice on how to customize a successful plan post-bankruptcy is a good investment. You can get to good scores in only a few years if you follow your own plan.