How To Rebuild Your Credit Score After Filing For Bankruptcy
How Long Does It Take To Increase Your Credit Score After Filing For Bankruptcy In Reno?
It’s easy to think of bankruptcy as a financial dead-end from which you’ll never recover. While bankruptcy is never ideal, it only leaves a temporary black mark on your financial records. However, restoring your credit after bankruptcy will take effort and time.
Ultimately, bankruptcy is a tradeoff in which debt that you cannot afford to pay is erased or reduced, but in return, you are viewed as a credit risk. This is reflected onto your credit score, which will drop dramatically. Filing bankruptcy will likely make it difficult for you to get a credit card, a bank loan, or a mortgage for several years.
However, many people who consider Reno chapter 7 bankruptcy already have a low credit score – in these situations, filing bankruptcy can even increase your credit score, because negatives such as a loan default can be cleared from your credit report. But you’ll still want to work to rebuild your credit to a higher number.
Although filing bankruptcy is significant, you can take immediate action to begin restoring your credit. Consider these suggestions from a Reno bankruptcy attorney to help you regain your credit after filing bankruptcy.
Bankruptcy & Credit Reports
Bankruptcy is noted on your credit report for 7-10 years, but that doesn’t mean you cannot obtain credit during that time. You will likely be able to get a credit card and even a car loan after filing certain types of bankruptcy, although your rates will probably be higher than average.
Most of the time, individuals file bankruptcy under two chapters of the federal bankruptcy law. Chapter 13 stops collections and enables the creation of a plan for borrowers to partially repay creditors over a certain number of years. Chapter 7 erases most unsecured debts and doesn’t have a repayment plan. Your Reno bankruptcy lawyer can help you choose the best type of bankruptcy filing for your situation.
While filing Chapter 7 may seem more attractive, and is also faster, one of the disadvantages is that it will negatively affect your FICO score for 10 years. A Chapter 13 filing remains on your record for just seven years.
Ways To Rebuild Your Credit Score
The only way to regain your creditworthiness is to manage your finances and credit well. Talk with a credit counselor and follow these steps to help rebuild your credit score.
Pay Your Bills On Time
When you receive a bill, pay it before the due date. Make sure you never fall behind on a payment. If you filed Reno Chapter 13 bankruptcy, always make court-ordered payments to creditors as scheduled.
Open a Secured Credit Card
A secured card means that you’ve deposited cash to cover the credit limit. So if you want a credit card with a $1000 limit, you’ll need to make a $1000 deposit to the credit card issuer as a security deposit. This gives you the convenience of paying with plastic and will improve your credit score if you make your payments on time.
Open An Unsecured Credit Card
Once your credit score has increased, open an unsecured credit card as soon as you qualify. One card is all you need. Using this card while paying the monthly statement in full and on time will also help you rebuild your credit.
Develop a Spending Strategy
As your score continues to increase, develop a spending strategy with your advisor. Make a monthly budget and follow it so you don’t accrue debt you cannot pay. Work to build an emergency fund so you don’t need to use your credit card to pay for unexpected situations.
Keep Paying Your Student Loans
Student loans usually cannot be discharged through bankruptcy, but paying them on time signals that you are managing your debt and will help rebuild your credit score.
H4: Monitor Your Credit Score
If you are using your credit card responsibly and paying all of your bills on time, your score will begin to increase.
Get a Credit Builder Loan
If you need money and have the means to repay, these loans usually available through credit unions can help you improve your score. You’ll be able to borrow small amounts of money at an affordable interest rate and then need to make sure to pay it off on time.
Consider a Big Ticket Purchase
Don’t take out a loan you cannot afford to repay. But if you have sufficient and stable income and can find a co-signer, you may be able to take out a vehicle loan or even a mortgage. It may be years before you will qualify, but doing so if it’s a wise financial decision, and making payments on time, will benefit your credit rating.
It takes time and intentional effort to rebuild your credit score after filing Reno Chapter 7 bankruptcy, but it’s very possible! Consult with your bankruptcy attorney to get your finances back on track.
Top Rated Bankruptcy Lawyers In Reno, Nevada
Get your finances back on track with help from the experienced bankruptcy attorneys at Zero Down Bankruptcy Lawyers of Reno. Our professional legal team is dedicated to serving people who need quick relief from debt or collections. Eliminate the stress of overwhelming debt and make your way to healthy finances by scheduling a free consultation with us today!
Zero Down Bankruptcy Lawyers Of Reno