4 Ways to Rebuild Your Credit After Bankruptcy

 Posted on October 07, 2024 in Bankruptcy

Bankruptcy is viewed as a way to pull yourself out of debt and get a fresh start. Like anything else, however, it comes at a cost. Your credit score takes a major hit if you discharge your debts through bankruptcy, making it more difficult for you to obtain new lines of credit like auto loans and mortgages. It can also affect your ability to get approved for checking accounts and credit cards. A Chapter 13 bankruptcy stays on your credit report for seven years, and a Chapter 7 bankruptcy stays on for 10.

It will take time, but you can eventually rebuild your credit after a bankruptcy discharge. This article will discuss four ways to do that, as well as how to contact a Texas bankruptcy attorney for more details.

Apply for a Secured Credit Card

A great way to start rebuilding your credit is to apply for a secured credit card. This is a credit card that requires a cash deposit which is used as collateral in case you default on your debt. If you make your payments on time and keep your outstanding balance low, it can start to improve your credit score. When applying for a secured credit card, make sure the lender will report your payment history to the three major credit bureaus.

Obtain a Credit Builder Loan

Paying off loans builds your credit score which then allows you to take out more loans. While you might not qualify for traditional loans after bankruptcy, you may be eligible to obtain a credit builder loan. This is a loan designed to help people rebuild their credit, and it works similarly to a secured credit card:

• You provide the lender with a cash deposit.
• The deposit is held by the lender as collateral. 
• The lender returns your deposit only after you have completely paid off the loan.

Become an Authorized User

Another way to start rebuilding your credit is to become an authorized user on someone else’s credit card. This means that you are signed on as a secondary user of the credit card, though the owner of the card is still responsible for any debt. Make sure to only become an authorized user on a card with a strong payment history.

Create a Budget

Taking control of your finances is the best way to rebuild your credit. Create a detailed budget that tracks your income and expenses and stick to it. It often helps to overestimate your expenses to give yourself a buffer if you miscalculate or make a particularly large purchase one month.

Contact a Dallas, TX Bankruptcy Attorney

Bankruptcy has its consequences and life after bankruptcy may be different in some ways than it was before. However, you can improve your circumstances through smart planning, budgeting, and rebuilding your credit score. Acker Warren P.C. is not only highly experienced in bankruptcy law but serves as a great resource for adjusting to life after bankruptcy. Schedule a free consultation with a Fort Worth, TX bankruptcy lawyer by calling 817-752-9033 today.