How Can I Rebuild My Credit After Filing For Bankruptcy?

Key Takeaways

• A bankruptcy comes off your report on a fixed timetable, so nothing you do speeds it up.
• Rebuilding means adding new payment history, not erasing old marks, and you can start right away.
• Check that every discharged account shows a zero balance; the bureau has 30 days to investigate a dispute.
• No credit repair company can lawfully remove accurate negative information, or charge you before the work is done.

For some, bankruptcy is among the most fearsome terms in the English language, primarily because people associate it with having little to no money, as well as a destroyed credit score. While bankruptcy will hurt your credit score, there is nothing to fear — you can still rebound. Bankruptcy in itself is not a bad thing. Millions of people have filed for bankruptcy, kept many or most of their possessions, including their homes, and, in the long run, got their credit scores back to where they should be. If you have recently filed for bankruptcy and are looking to rebuild your credit score, please read on and reach out to our experienced New York bankruptcy attorney for some tips to rebuild your credit.

Where Does Credit Rebuilding Actually Begin?

First and foremost, rebuilding your credit is less about repairing the past and more about building a new, strong credit history. Lenders find things like recent, consistent payments important, so the goal is to open something small that reports to the credit bureaus and never misses a payment.

• Ensure you continue to pay off all accounts that were not discharged by bankruptcy, such as student loans, or any damages you had to pay relating to personal injury lawsuits
• You should consider applying for a secured credit card. This allows you to put down a deposit that will become your credit limit, so there is no risk to the lender. However, the account will still report to the bureaus each month, helping you build credit history the same as any other type of card.
• You may want to ask a trusted family member with strong credit to add you as an authorized user on their card. Their payment history for that line can appear on your credit report without you having to assume any responsibility for the balance. However, you should ensure their card issuer reports authorized users first.
• Consider a credit-builder loan, usually offered by credit unions. The lender holds the money, often $300 to $1,000, in a locked savings account while you repay it over six to 24 months. Your payments are reported, and you collect the balance at the end.
• Get credit for rent and utilities you already pay. Those payments do not normally appear on a credit report, but a rent reporting service, or a landlord willing to furnish the record, can put them there.
• You should try to keep your credit balance low against your limit, and pay the full statement balance, rather than the minimum. What you owe relative to what you are allowed to borrow is one component that makes up a considerable portion of your credit score.
• Get yourself a new credit card. Though this can be difficult, certain credit card companies are more likely to trust you, such as store or gas credit cards. Once you obtain new credit, however, you must meticulously keep after your finances and ensure you make all your payments on time.
• If you have recently filed for bankruptcy, it is best to stay steady at one job, especially if you are looking to apply for a new credit line. Oftentimes, lenders will take the financial stability a consistent job generally indicates into account.
• When the time comes to apply for new credit, try to do so with a card you think you have a chance of being accepted for, and never apply for several at a time. If you are rejected for numerous credit cards, it will affect your credit score, and creditors will think you are frantically searching for credit.
• Co-signers are an excellent way for those recovering from bankruptcy to rebuild their credit. Essentially, a co-signer is a family member or friend who agrees to co-sign on cards or loans, earning you better credit. However, if you do not keep a meticulous payment record in the future, your co-signer’s credit will also face ramifications.
• Do not listen to “credit repair companies.” They will promise you things that are either too good to be true or pretend they can assist you with matters that, in actuality, you are perfectly capable of resolving yourself.

Within 10 years of filing, your bankruptcy case should fall off of your credit report for good. Unfortunately, this removal runs on the calendar as opposed to your conduct, so nothing you do can remove your filing from your report earlier. However, Chapter 13 bankruptcy generally comes off earlier than a Chapter 7 filing.

Can I Start Rebuilding Credit Before My New York Bankruptcy Case Is Closed?

In some capacity, yes, and this is where those filing for bankruptcy differ from others rebuilding credit. A secured card is typically uncontroversial while your case is open, as the deposit means you are not assuming any new debts. Applying for a standard, unsecured credit card during Chapter 13, on the other hand, is a different matter. This is because incurring considerable new obligations while on a repayment plan requires the approval of the trustee or court. As such, you should ask before applying, rather than informing after.

How Do I Check My Credit Report and Fix What Is Wrong?

Checking your credit is the one step people often skip, and it is one that can cost them points they’ve never actually lost. Unfortunately, errors on credit reports are common, and following bankruptcy, mistakes are more common. This is because every discharged account must be updated by the credit furnisher responsible for reporting it.

Get a Free Copy of Your Credit Report

AnnualCreditReport.com is the only federally authorized source, and it never asks for a credit card number. As such, you should request a copy from all three credit bureaus, as they may show varying information. You should check that every debt wiped out in your bankruptcy case shows a balance of zero and a notation indicating it was included in bankruptcy or discharged. You should also check to ensure that the filing date is right.

Pulling your own credit report is considered a soft inquiry, so doing so will not impact your credit score. As such, there is no reason to avoid checking.

Dispute Inaccurate Information

File the dispute with the bureau reporting the error. It generally has 30 days to investigate, and it must forward everything you send to the company that supplied the information, which then has to investigate on its own side. You get the results in writing, and if the dispute produces a change, you also get a free updated copy of your report that does not count against your regular free reports.

What Can a Credit Repair Company Legally Do?

Legally, credit repair companies can do less than what their advertisements may suggest, and the rules are worth knowing before you begin making payments. The Credit Repair Organizations Act:

• Prohibits these companies from taking payment before any promised work is completed
• Requires the contract to be in writing
• Allows you the right to cancel within three business days

You should note, however, that no company can lawfully remove any accurate but negative information from your credit file. As such, anything a credit repair company can legally do regarding a legitimate error, you can do for free using the dispute process outlined above.

Contact Our New York Bankruptcy Firm Today

Bankruptcy can be an overwhelming and nerve-wracking process for many people. However, it’s important to understand that you do not need to navigate this matter on your own. At the Law Offices of Allen A. Kolber, Esq., our firm can help guide you through the bankruptcy process to ensure you can reap the benefits. Contact us today to discuss your options. We are ready to represent you during these difficult times.