7 Steps After Bankruptcy to Increasing Your Credit Score
There are many advantages to having a good credit score. Qualifying for lower interest rates, ability to get approved for loans and lines of credit, and paying less on loans for items such as homes and automobiles to name a few.
If you have just filed for Bankruptcy you don’t need to wait for 7 to 10 years for your bankruptcy filing to be removed from your credit report. You can rebuild credit right after bankruptcy. Credit Repair after bankruptcy requires your self-discipline, commitment and persistence. It is a long term process but the reward is new, productive spending habits.
With that in mind, here are 7 Steps you can implement to increase your Credit Score starting today.
1. Pay all of Your Bills on Time
This is a good habit to develop. Start keeping track of what time of the month each of your bills are due. Generally they will be due on at either the beginning/end of the month or mid month.
Knowing exactly when which bills are due will help you manage your budget and make sure you can pay your bills when they are due. A better practice is to pay all your bills early.
2. Get all Your Accounts Caught Up and Current
Getting behind on bills is an easy way to fall into a credit nightmare.
Once you’re behind, even if you keep paying your bills on a monthly basis, they will be reported as a month behind (or more) every single month, greatly damaging your credit.
Get all of your bills that you are behind on caught up and then, as pointed out in tip number one above, stay current and pay them on time.
3. Keep Low Balances on Your Credit Cards
Everybody loves to have a high credit line, the higher the better right? Yes and no.
No matter how high your credit line is, the closer you are to your limit, the more of a credit risk you look like. Just because you have a high line of credit doesn’t mean you should be maxing out your cards. Once-in-awhile maybe, but not on a consistent basis.
4. Pay off Your Debt and Stop Transferring Balances
We see them all the time, attractive offer to transfer our balances to new low-interest credit account.
While transferring balances to lower-interest accounts make sense in the short-term, is it contributing to your longer term goals of getting out of debt.
If you’re transferring the balance to take advantage of a lower interest rate with the intent of paying off the debt sooner, that’s good. Remember, your long term strategy is to get out of debt as quickly as possible.
5. Don’t Close Unused Credit Card Accounts
After reviewing their credit reports (you should be checking your credit reports on a regular basis) many people will see old credit card accounts that they haven’t used in months or years.
Figuring it’s a way to “clean things up” they go ahead and close those credit card accounts. Sounds like it’s a good ideas, but it’s not.
Having older accounts remain on your credit report establishes a history of credit as well as a higher line of available credit. Keeping these accounts on your report are positive factors which will increase your score.
6. Don’t Open new Credit Card Accounts
Every time you attempt to open a new credit card account, your credit score gets lowered (even if you get approved for the account). With all the offers you see on television and get in the mail, not to mention every time you go shopping at store, it’s difficult not to apply to open an account.
Short term offers such as low interest rates or frequent flyer miles can seem appealing, but ask yourself if you’re really going to take advantage of the offers? Unless it’s absolutely necessary, don’t go chasing after every opportunity to apply for a new credit card.
7. Only go Shopping for 14 Days
Don’t worry, I’m not talking about your normal shopping habits!
If you’re in the market for a mortgage on a new home, a new car, or shopping for insurance rates, do all your shopping within a 14 day period.
As mentioned above, every time you apply for credit, it will count against your credit report as an inquiry. Now considering you may go to several different mortgage companies or car dealerships those inquiries can add up fast!
However, if you limit your shopping within a 14 day period all those inquiries will be “grouped” into just one inquiry. At leas the credit reporting companies do something right!
While nobody knows exactly what formulas the credit reporting agencies use to determine your credit score, following the 7 steps above will help you increase your credit score and get a better handle on your financial situation.
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