Increase a Credit Score After Bankruptcy
When you declare bankruptcy, it has a major negative effect on your credit score. You'll suffer consequences, such as being unable to open charge accounts or purchase items on credit, or being forced to pay high interest rates. Fortunately, there are many steps you can take to improve your credit score. There is no quick fix, but if you're willing to put in the time, you can improve your score within a year to 18 months.
Instructions
1. Open a charge account at a furniture or appliance store, or another type of retailer that sells big-ticket items. These stores are often more willing to grant you credit after a bankruptcy than charge-card issuers. The account might have a high interest rate, but its value in helping to boost your credit score will be worth the cost.
2. Make a purchase from the store, putting down 50 percent of the item's cost. making a significant down payment will allow you to pay off the account more quickly and help minimize the amount of interest you pay.
3. Open a secured credit-card account. This type of account requires you to secure your Mastercard or Visa by depositing money into a bank account. Choose an issuer that will allow you to convert the account to unsecured status after a specified length of time. If you make your payments on time, this can be in as little as 6 months to a year.
4. As soon as you are able, convert your secured credit card into an unsecured account. The interest rate may be high, but having a regular account that is being paid on time will help boost your credit score.
5. Pay all of your bills on time or early. This includes your new accounts and the payments for any assets you were allowed to keep in the bankruptcy, such as your home mortgage or car loan. Demonstrating that you are handling your finances carefully will make you more attractive to other prospective lenders. Opening and paying additional accounts will increase your credit score.
6. Carefully monitor your credit report to catch any erroneous negative information as soon as it appears. You are entitled to a free copy of your credit report from each of the three major credit bureaus on an annual basis. Get one report every 4 months, which will use up your year's worth of reports. If you catch a mistake, immediately report it to the credit bureau.
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