Steps For Rebuilding Your Credit After Bankruptcy
Unfortunately, the fresh start that a bankruptcy filing can bring to your life and financial well-being, comes at a steep cost to your credit ratings and FICO scores. While it is true that a bankruptcy filing can stay on your credit anywhere from 7 to 10 years. That doesn’t mean you are sentenced to some type of credit purgatory for all that time.
Once your bankruptcy is filed, most people will see a drop in their scores initially, but through positive pro-active steps. You can begin to recover from the initial point drop. If your credit was sub-par to begin with, then you might see a rise in your score even before your discharge.
Either way, we have a few tips for the next few steps.
The biggest factor in your credit score is payment history, and your discharged bankruptcy should have reset that to zero. So it stands to reason that to improve your credit score you need to create some positive payment history. While we would never suggest you go out and get yourself back into debt. We are merely making note that responsible credit card use for small purchases and paying them off on time, will go a long way in helping your score to climb.
Another big factor is the age of your credit history. This takes time to build. However, there are a few shortcuts you can employ here as well. Having a friend or family member who has had a great credit history for a long time with one or more of their tradelines add you to their account as an Authorized User is a great way to add age and positive payment history to your account.
What to do though if you do not have access to a friend or family member with that kind of history who is willing to help you. What then? In that case, all is not lost. As you can still buy Authorized User status in the form of purchasing a tradeline. You will have to do your due diligence when it comes to what tradeline is best for you. However, this strategy has offered many credit boosts to many people who had no one else to help them with the “aging” of their credit history.
Our last tip for today would be not to file for a credit card until you are ready and when you decide to do so. Try for several at once and be done with it.
The FICO algorithm groups inquiries made close together within a certain time frame altogether in the calculating of your score. So it affects your score less to group your applications together as opposed to stringing them out over time.
Please stay tuned. As we will routinely be bringing you more steps for rebuilding your credit after bankruptcy
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