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Rebuilding Your Credit

Rebuilding Credit after Bankruptcy in MA

Rebuilding your credit after bankruptcy is a process that involves many variables and time. However, your credit can be rebuilt, and in many cases, better than it was before. Our clients almost always stress their concern about losing their ability to get credit for years after filing bankruptcy. Filing for bankruptcy will greatly affect an individual’s ability to obtain credit. However, the more effort you put into rebuilding your credit, the quicker the credit scores will improve and access to credit will increase.

Here are some tips on how to reestablish your credit:

  • Apply for a secured card where you deposit cash and charge against it. Make sure you only apply for secured cards with a company that promises to report regularly to the major credit reporting agencies. They maintain your credit report. Think about it – what good does it do to get a secured card from a company that does not report to the major credit bureaus? Pay back advances in a timely fashion to build a track record of paying on time so that they will be reflected as positive marks on your credit report.
  • Open a checking or savings account, start saving money. You will need money for down payments. The more money you can pay down on a purchase, the lower interest rate you will receive. Besides, lenders may look at how you handle a checking and savings account as an indication of whether or not you can responsibly handle money.
  • Write a letter to each credit reporting agency explaining the circumstances that lead to your filing. You are allowed to submit up to 100 words of explanation to each credit reporting agency. Make sure you check your credit report often to see if there are any discrepancies that have not been resolved. Actively engage creditors who have failed to zero out your outstanding balance.
  • Pay your utility bills and rent on time. After filing bankruptcy, building up a history of paying on time is crucial.
  • Find a friend or relative to cosign for you on a loan and pay it on time. Be careful, however, if you do not pay it on time, or not at all, you will do significant damage to the credit record of the friend or family member who was kind enough to cosign for you.
  • Look for car dealers and mortgage brokers that claim to be ‘bankruptcy friendly.’ Buy a used car so you do not get hit with the depreciation that occurs during the first two years of a new car purchase.
  • Pay your reaffirmed, pre-bankruptcy debts on time.
  • Live within your means. If you do not have the money, do not spend it. It if helps, limit yourself to only what your need, rather than everything you want. As a rough guideline, make sure you payments on consumer debts do not exceed 20% of your expendable income after your costs for housing and a vehicle.

In some cases, bankruptcy is not a choice, but a way of starting over financially, and your only option. However, there are many aspects to filing bankruptcy that can be difficult to understand. Contact the Law Office of Brian R. Lewis today for your free initial consultation to have someone who understand bankruptcy on your side.