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Steps to Improve Credit Score Following Bankruptcy
Americans have used credit extensively during the recession. Qualifying for credit has become very difficult, however, and millions of people have felt financially fraught, desperately needing a fresh start.
Bankruptcy Helps Thousands of Connecticut Residents
According to the U.S. Bankruptcy Court, nearly 10,000 people in Connecticut filed for bankruptcy in 2009, and more than 11,000 filed in 2010. These numbers represent a dramatic increase from five to ten years ago. The American economy and current job market has made bankruptcy the best option for a lot of people.
Individuals tend to have several questions that must be addressed before deciding bankruptcy is appropriate. These questions include what might happen to the family home, which debt is eligible to be discharged, as well as how bankruptcy might affect their life down the road.
Restoring Your Credit Score
One of the most common questions people have following the bankruptcy process is how they can restore their credit score. Obtaining new credit after bankruptcy can be difficult, but there are steps people can take to begin rebuilding credit for the future. These steps include:
- Take on as little new debt as possible - debt to income ratio is an important credit score determinant.
- Obtain a secured credit card if your previous cards have been cancelled (this will establish a positive payment history).
- Pay off credit cards at the end of every billing cycle and avoid charging more than 30 percent of their limits.
- Pay with cash whenever possible.
- Avoid submitting multiple credit applications (credit scores take a hit with each inquiry).
- Develop a budget and abide by a strict budget.
This list is not exhaustive, but following these recommendations can jumpstart even a recent bankruptcy filer on the road to a sound financial future. Bankruptcy is designed to give debtors a fresh start, so it is important to realize anyone can emerge from bankruptcy with a positive outlook for the future.
Anyone who is considering bankruptcy or wondering how they can rebuild their credit should speak with a qualified attorney immediately. The experience bankruptcy attorneys provide is invaluable before, during and after the bankruptcy process.