The Best Ways to Rebuild Your Credit after a Chapter 7 or Chapter 13
It’s possible to make your way in the world without access to credit, but it’s extremely difficult. You’ll likely never be able to own your own home, and you’ll likely be limited to driving older vehicles. That’s one of the reasons why, in the aftermath of a bankruptcy filing, you want to do what you can to rebuild your credit rating, so that potential lenders will be willing to give you a second chance.
How to Best Reestablish a Good Credit Rating after a Bankruptcy Filing
First and foremost, you want to demonstrate to a potential lender that you have learned how to effectively manage your money. The credit reporting agencies tend to give higher accolades to consumers who consistently show the ability to manage the broad mix of credit that most households require. That generally involves an automobile loan, a credit card or two, and some type of secured debt, such as a mortgage. To the extent that you can, you should try to secure each of these types of obligations. Then comes the most important part.
Once you have been able to secure certain types of credit, make certain that you honor your commitments. Always pay all your debts on time, but before they are due, if possible. Furthermore, you’ll rebuild your credit faster if, instead of paying all your credit card debt off immediately, you pay them down to about 10-25% of your available credit. That demonstrates your ability to regularly manage your finances.
Additionally, though, you don’t want to leave an unpaid balance of more than about 30% of your available credit. The less credit you have available on a credit card, the lower your credit score. As a practical matter, though, the higher the balance on your credit card, the more you’ll have to commit in monthly payments and the less discretionary income you’ll have.
Also, if possible, avoid opening a credit card with a low credit limit. You’ll build your credit rating faster by taking out credit cards with a higher limit, but never exceeding more than 30% of your available balance.
Contact an Experienced Rockwall, TX Bankruptcy Attorney
You can rebuild your credit rating after bankruptcy. At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.
