You may have heard that your credit score will take a beating after you’ve filed for bankruptcy. A Chapter 7 bankruptcy stays on your record for ten years, while a Chapter 13 filing stays for seven years. Don’t lose hope. With discipline and commitment, you can build your credit and be on your way to a good credit score and secure financial future. This article will discuss some easy tips you can follow to improve your FICO score.
Don’t let a fear of a bad credit score deter you from declaring bankruptcies. It’s one of the financial protection available to Americans who’ve been swamped in debts. If you need a reprieve from your financial problems, consult with our Troy Bankruptcy Lawyers in Michigan.
Pay On Time
Payment history is one factor that dramatically affects credit scores. It’s essential to pay your bills – library fines, student loans, or medical bills – promptly to improve your credit score. If any account goes into collections, it will be reported to the three major credit bureaus (Equifax, Experian, and TransUnion) and can damage your work to improve your credit score.
You’ll need a history of consistent payments to show creditors that you are a responsible borrower. Live within your means and spend your money wisely. While you’re in the period of building credit, you’ll need willpower and wits to manage your balances and payments.
Create Healthy Credit Habits
It takes effort, discipline, and commitment to bring yourself up from a low credit score. It’s important to reflect on your spending habits that put you to such a low score in the first place.
Live within your means and spend your money wisely. Be wary of your credit limit and try to avoid consuming all of it each month. Credit utilization is measured by the amount your available credit that you spend. It’s one of the factors that can affect your credit score.
It can be challenging to overcome your unhealthy spending habits. Keep in mind that it’s these habits that pulled your score down. Not only will changes in your habits raise your score, but they will also decrease the stress you have in your life by living simply but meaningfully.
It’s difficult to build healthy credit habits if you’re swamped in debt. Filing for bankruptcy helps you get back on your feet and discharge plenty of your debt. A Troy bankruptcy attorney can help you declare bankruptcy properly.
Get New Credit
An excellent step to take on the path to building your credit is opening new accounts on your credit reports, which may be counterintuitive as it may have been credit card debt that brought your score down initially. However, using credit cards properly helps you build a positive payment history.
A low credit score may make it difficult to get approval for some credit cards. There are some cards for bad credit that help in building your credit. A secured credit card requires an initial deposit, making it an excellent option for those with poor credit that need to get a credit card.
Don’t overdo it. Too many credit card applications over a short period of time can negatively impact your credit.
If you have a credit card application denied, you’ll get a letter in the mail telling you the specific reasons for the denial. These details give you more information about how creditors view your credit and factors that could play a role in future credit card applications.
Not all credit cards are created equal. The following two types are unhelpful at best or predatory at worst.
- Prepaid Cards: It’s easy to get these kinds of cards regardless of credit score. However, no matter how much you pay or how responsible you are paying, a prepaid card won’t help. Payments made with prepaid cards don’t get reported to the three credit bureaus. As such, they won’t improve your creditworthiness.
- Subprime Credit Cards: These cards have absurdly high fees and interest rates. No matter how careful you are, it’s easy to fall back into debt if you’re using these kinds of cards.
Final Thoughts
A bad credit score is not a life sentence. With hard work and dedication, you can have an excellent credit score and secure your financial future. It’s going to be challenging to do so if you’re still deep in debt and being hounded by collection agencies. Bankruptcy can help you eliminate your debts and get you started on improving your credit score.
Our lawyers at Hammerschmidt, Stickradt & Associates or HS&A, P.C. aim to help individuals and families manage their financial situations and get out of debt. Consult our Troy bankruptcy attorney today for a consultation!
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