Rebuilding Your Credit After Bankruptcy

Many people who are considering bankruptcy are in dire financial situations. You might have late payments, defaults, collection accounts, and more, most of which will be reported to your credit. While your bankruptcy case can help immensely, it will also be reported to your credit that you filed for bankruptcy. This, however, does not mean you can never obtain credit again, as there are several ways that people can rebuild credit following a bankruptcy case. A California bankruptcy attorney from Miranda, Magden & Miranda, LLP, can guide you through your case and provide information about how to proceed afterward.

Stay Current on Payments

You will still have bills and other accounts after bankruptcy, and it is critical that you stay on top of them. A bankruptcy stays on your credit for seven to ten years, but every current payment helps to improve your credit, as does preventing late payment reports. 

Keep Stable Employment When Possible

If you can, it can help to avoid jumping from one job to another and keep stable employment as much as possible. While this will not affect your credit score, lenders might be more likely to extend credit to people with a reliable income. 

Apply for the Right Type of Credit

You should not expect to get credit cards and a mortgage right out of the gate after a bankruptcy. However, this does not mean you cannot get any credit at all. Having the right type of credit line can improve your credit faster, so it is important to know the right type of applications to submit. These might include:

• Secured credit card
• Credit building loans
• Gas or retail cards with low limits, or
• Small installment loan

If you need to get a different type of credit, you can try to find a cosigner with strong credit who might sign with you. 

You should not submit too many applications for new credit, though, as each application will result in a hard inquiry on your credit report. Too many inquiries will lower your score instead of helping it. 

If You Receive a New Credit Account

Make sure you keep your balances low on any new credit cars or revolving accounts. Having a high utilization of your available credit will quickly lower your score. For example, if you receive a retail card with a $500 limit, and you have a $300 balance, it can lower your score because you are over 50 percent of utilization, even though your balance is relatively low. 

Also, not all creditors will report secured credit cards or other on-time payments to the credit bureaus. You can request that the company report your payments to all three credit bureaus, and this can include rent, cell phone bills, and more. 

Learn How a California Bankruptcy Lawyer Can Help

At Miranda, Magden & Miranda, LLP, we are dedicated to helping clients before, during, and after the bankruptcy process. If you need assistance, please contact us to speak with a California bankruptcy attorney.