Once you have completed your bankruptcy and received your discharge order from the court, you will want to move forward financially. But what do you do? After your debt is eliminated, how do you repair your credit? Can you? Our experienced California attorney’s answer to that last question is a resounding “yes.” Below, the “how” is explained in further detail.
Understand that it Takes Time to Repair Your Credit After Bankruptcy
Whether you received a discharge through Chapter 7 or Chapter 13, you just accomplished an important step in re-establishing your credit score and moving towards a fresh financial start. However, the next step is going to take some time, so you need to be patient. Creditors know two things at this point – one, you just eliminated a significant amount of debt you were unable to pay, and two, you no longer have any other substantial financial obligations.
While the bankruptcy will eventually fall off your credit report, you can start taking steps to improve your credit score before that. However, even if you begin immediately, this process will take some time. Be wary of anyone who offers you a quick-fix credit repair option – it is usually a scam.
Make Sure Your Credit Report is Accurate after a Bankruptcy Discharge in California
As stated above, your bankruptcy will appear on your credit report. While that may sound like a negative situation, the important thing is what no longer appears on your credit report. Having multiple delinquent accounts and balances severely impacts your credit score. Because of your discharge, those balances should now show zero.
It is not uncommon for a creditor to not report the change in your account and continue reporting the delinquent balance. Therefore, it is essential to check your credit report regularly. You are entitled to a free credit report once per year. If you see that your discharged debts are still appearing on your credit report, you should file a dispute with the credit bureaus. Our Sacramento bankruptcy attorney can assist you with this process, including forwarding a copy of your discharge order to the three credit bureaus.
In some bankruptcies, a debtor reaffirms a secured debt, such as a car loan or mortgage. Continuing to pay these bills will help your credit score if your creditors accurately report them. Therefore, just as it is crucial to ensure that your discharged accounts are listed on your credit report, it is also vital to make sure any current payments and balances are also listed correctly.
Additionally, if there are accounts that were not originally reported on your credit report but discharged, you should take note of them. These debts, even though discharged, could be reported at a later date. Building a good credit score requires regular monitoring of your credit score.
Once you receive a bankruptcy discharge in California, sometimes even before, you will most likely find many credit repair advertisements in your mail and email. If a credit repair company tells they can remove the bankruptcy from your credit report, do not believe them. The bankruptcy will eventually fall off of your report. Remember, time and patience are important in building credit, there is no quick-fix scheme.
Getting New Credit Cards after a Bankruptcy Discharge in California
One of the best ways to build your credit after bankruptcy is to get another credit card. However, traditional credit cards might be hard to come by. Some companies will offer you a credit card because you are not eligible for another discharge for years. Unfortunately, these cards will come with very low credit limits and higher interest rates. Another option, if you are having difficulty with traditional credit cards, are store credit cards and gas cards. Typically have lower qualification standards.
A more likely option is a secured credit card. Unlike unsecured credit cards, a secured card requires a cash deposit in case you are unable to make your regular monthly payments. Other than that, it functions as a traditional credit card. By making small monthly purchases, you can avoid the high-interest charges and you can begin building your credit score.
Sometimes a friend or family member will allow you to use their good credit history to help build yours. By naming you as an authorized user, you can use their card and credit to help repair your credit score. However, this is not the most efficient method to build good credit. Also, your friend or family member will be legally obligated to pay any charges or debt you incur.
Can Loans Help Build Credit after a California Bankruptcy?
Because your credit is still probably poor after your discharge, many banks and lending institutions will be reluctant to approve you for a loan. However, if you have a co-signer, more doors will be open, including auto loans and some personal loans. Again, this is not the fastest way to repair your credit, but it still helps.
No matter how you go about repairing your credit, there are two crucial things to keep in mind. First, make sure you make timely payments on any new debt you incur. Once you fall behind more than 30 days, you risk having it reported to one of the credit bureaus, as well as opening yourself to collection lawsuits. The second is to keep a low balance on any new cards. This will not only help your credit score, but it will also decrease the chance of falling behind again.
Call Our California Bankruptcy Attorney to Help You Repair Your Credit After a Discharge
Many people who file for bankruptcy have as many questions after they receive their discharge as they had before the process began. The most common inquiry is how to rebuild their damaged credit score. Our experienced Roseville bankruptcy attorneys are dedicated to assisting debtors before, during, and after their bankruptcy. We understand the importance of repairing your credit score and are ready to provide answers and help. Call The Bankruptcy Group at (800) 920-5351 to schedule a free consultation to discuss your options after bankruptcy.