27 Oct 5 Ways To Raise Your Credit Score After Bankruptcy
Have you recently filed for bankruptcy? Are you worried the negative impact it will have on your credit score will be impossible to escape?
The truth of the matter is that the effect filing for bankruptcy will have on your credit score can be significant if not done correctly. That’s why it’s important after filing that you put in the extra effort to rejuvenate your score.
This process doesn’t have to be a difficult one. If you don’t change the habits and mindset that got you into debt in the first place you’ll have a hard time.
Here are 5 ways you can raise your credit score to help repair it after filing for bankruptcy.
Avoid Bankruptcy Traps
Avoiding traps is just one of the ways you can help raise your credit score after bankruptcy. When we say the word trap we mean it in the literal sense. Credit card companies make it their goal in life to provide you with new ways to open lines of credit.
Whether it’s for a new house, a new car, a new way to buy gasoline, or simply providing a tool to buy clothing at your favorite retail store. No matter what the line of credit is used for the method of trapping you is always the same. Enticement. They will try to entice you to sign up by showing you what you’re missing out on.
You have to ignore this. If after filing for bankruptcy you’re on the path to redeeming your credit score and trying to keep your freshly clean finances in good standing ignore these people. You can do this by reminding yourself what got you into trouble in the first place.
Also, why you don’t want to have to go back down that road with your finances. You have to make it your goal in your financial life to avoid opening new credit accounts and avoid spending money on any existing accounts.
Set A Plan & Stick To It
Having a plan in anything is a sure way to increase your chances of success. Whether you want to set a budget for your spending, draft income reports to track your monthly income, or create payment calendars to make sure you pay on time. It’s up to you.
Do what you know will help you and avoid situations or ideas that will hurt you. In the end sticking to your plan to stay on the right path financially is all that matters.
Pay On Time & More Than The Minimum
Your credit score is made up of different factors that determine its overall value. You have your length of credit history, which makes up 15% of your overall score. Any new credit and other factors that makes up 20% of your score. How much debt you actually owe, which is 30% of your score. This includes your debt to income ratio.
When your debt to income ratio is low you look better to creditors, which can help raise your credit score. Keeping your debt to income ratio below 50% is great when trying to boost your credit score.
Lastly, there’s your payment history. Your payment history, or whether you manage to pay your bills on time and consistently, makes up 35% of your total score. That’s a big chunk of your score to pay attention to when looking at the score as a whole. This means you have to start paying on time, every single time. This will help boost your score or severely hurt your score if you’re late or inconsistent.
It Won’t Last Forever
Even though filing for bankruptcy stays on your credit for 7 to 10 years it doesn’t have to feel like forever. By following the above rules you can boost your score way before your time is up.
You can also still make large, necessary, purchases with a bankruptcy on your credit you just might have to deal with higher interest rates for a while.
Here at Bolinske Law we specialize in Minnesota bankruptcy and everything that surrounds the process.
We’d love to have a chance to talk with you if you are thinking about filing or are already going through a bankruptcy.
Not knowing what to expect when filing for bankruptcy can mean you make the wrong choices. All of which can lead to disaster. We can discuss what you can expect and ways to be successful to ensure the best possible outcome.
Call us at (952) 294-0144 or contact us here.