If you decide to file for bankruptcy, you may be concerned about how that will impact your credit score. Even if you do not file for bankruptcy and you continue to fall behind your bills, the truth is that your credit score has already taken a significant hit, especially if you are facing foreclosure or vehicle repossession.
But remember, a bankruptcy case will remain on your credit report for at least ten (10) years. However, what type of bankruptcy filed will factor into your credit score.
For instance, if you filed for Chapter 7 bankruptcy and all your unsecured debts were discharged, the improvement of your debt-to-income ratio will benefit your credit score within a few months after receiving the discharge. On the other hand, if you filed for Chapter 13 bankruptcy, making monthly and timely payments on your plan can also improve your credit score.
After your bankruptcy case closes, the following are several ways to improve your credit score:
Now that you have a clean financial slate after your bankruptcy case closes, you must establish a history of regularly paying your monthly bills, from credit cards and loans to recurring expenses such as mortgage/rent and utilities. If you continue to pay all your monthly bills on time for at least six straight months, your credit score will increase.
If you are unable to pay, reach out to creditors and request a lower monthly amount. Although this will cost you more down the road, the goal is to build a history of timely payments.
If you miss a payment, contact the creditor right away to explain why and try to correct the issue.
After your bankruptcy, you will most likely receive a plethora of credit card offers. Some offers will be from secured credit cards that require you to deposit a sum of money, while other offers will be from unsecured cards that are associated with high-interest rates.
No matter what type of card you obtain, you must pay it off each month. Consider getting a credit card that offers cash-back rewards, store discounts, and/or airline miles, so that you will earn something back.
Although lenders will likely offer you loans at higher interest rates because of your bankruptcy case, do not be discouraged from buying a car and being mobile again. You can overcome a high-interest rate in several ways, such as paying more than the minimum payment each month.
If you are interested in filing for bankruptcy in Northbrook, IL, contact Bach Law Offices, Inc. today at (847) 440-5998 for a free initial consultation. Get four decades of combined experience on your side!
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