4 Helpful Tips for Rebuilding Credit | Richard Banks & Associates, P.C.

If you’ve filed bankruptcy or have suffered some financial missteps, your credit score is assuredly lower than you would like it to be. At Richard Banks & Associates, we want to make sure that you are set for success following your financial crisis, so we have compiled some information that will help you rebuild credit.

First, it’s important to note just what filing bankruptcy can do to your credit score. If you have a good score prior, such as one that is 700 or higher, you could see that number drop by 200 points or more. Those with credit scores of 680 or lower will normally see a 130- to 150-point drop. Chapter 7 bankruptcy will stay on your credit report for 10 years, while others will only show up for seven years.

But don’t worry, there are ways to begin rebuilding your credit even in that seven to 10 year time frame, including some of the ideas below!

1. Check your credit report. We know that you might not want to see what the damage is, but it’s vital to know what shows up and make sure that everything is accurate. If you find something that is inaccurate, you can dispute it. Knowing what you’re working with and building from is always a great way to start the rebuilding process!

2. Use a credit card. This may sound like less-than-excellent advice, but if you have a credit card that was not included in your bankruptcy filings, using it can help rebuild your credit. Now, this isn’t a pass to use the credit card for anything—the key is to use it sparingly and to pay it off on time and in full each billing statement. Secured credit cards, which require an initial deposit, are a great route to take, too!

3. Create a budget. We may sound like a broken record here, but creating a sound budget is one of the best things you can do for yourself when rebuilding credit. This will help you take control of your finances and ensure that all of your bills are being paid on time. Creating a budget should also allow you to begin putting some money away in savings, which is another positive for your financial situation!

4. Don’t apply for lots of new credit. You will see credit card offers begin coming in, and even though it may be tempting, don’t jump at any and all of those offers. You want to rebuild credit, not land yourself in another less-than-ideal financial situation. Keep things simple and don’t become overwhelmed with new debt!

It may seem like rebuilding your credit is a daunting task, but there is no need to fear it. Instead, look at each day as a new opportunity to make smarter and safer financial decisions. In no time at all you will begin to see the rewards of your hard work.

If you are at the point where you are just beginning to consider bankruptcy, know that the Richard Banks & Associates, P.C. team is here and ready help walk you through the process. Most importantly, know that you’re not alone!