Law Office of Rick Morin, PC

It is absolutely possible to rebuild credit after bankruptcy. There are many myths out there about re-establishing your credit score after a bankruptcy. Here are some tips and tricks to get you back on track after bankruptcy.

1. Bankruptcy Doesn’t Mean No Credit

Yes, it is true — bankruptcy will remain on your credit report for 7 to 10 years after your bankruptcy filing. However, this does not mean that you won’t have access to credit for 7 to 10 years. This is the biggest myth that I hear.

Most of my clients report receiving credit card solicitations within months after their bankruptcy case closes. Current federal mortgage guidelines allow bankruptcy filers to obtain FHA-backed mortgages just two years after bankruptcy.

I strongly recommend that my clients take immediate action after their bankruptcy cases are closed to start re-establishing their credit.

2. A Secured Credit Card is a Great Way to Start

Those initial credit card solicitations you receive in the mail after bankruptcy won’t be very good. They often times will have very high interest or outlandish fees. Read the fine print carefully before you take the plunge

A better bet is to contact the financial institution where you already bank. See if they offer a “secured credit card.” Most banks do these days. Capitol One and US Bank also have great secured card products.

3. Re-Affirm your Mortgage or Car Loan 

Here’s a credit product that you might already have: a car loan or mortgage loan. Make sure that you talk to your attorney about re-affirming these loans during your bankruptcy. If you re-affirm a secured loan, your lender will keep reporting your payment history to the credit bureaus even after bankruptcy. If you keep up with these payments, you’ll have a credit account reporting good things to the bureaus on day one after your bankruptcy is over.

4. Pay Your New Accounts on Time

Whatever you do with your new credit products, make sure that you pay them on time! Even a single late pay can wipe out months of hard work. Even if you have to make the minimum payment, just pay it! More than any other factor, late payments tell the world that you aren’t able to manage your obligations responsibly. As you start racking up more and more on-time pays on your credit report, your score will keep going up. I really can’t stress the importance of on-time payments enough!

Ultimately, there’s no secret recipe involved with increasing your credit score after bankruptcy. Responsibly manage your credit accounts and your lenders will see that you are serious about your new financial direction in life — even with a bankruptcy on your record.

Contact my office at (916) 333-2222 to discuss how bankruptcy can get your finances back on track and get you a fresh start in Sacramento!