Many times, after filing for bankruptcy, people believe that the best thing to do is to avoid credit accounts for at least the first seven years. This is a huge misconception about bankruptcy that is going to hurt you more than it will help. Here are four little-known ways you can get started on repairing your credit:
- Debt to Credit Ratio Matters Most: The one thing that matters most that people don't realize is the debt to credit ratio. If your debt exceeds the amount of credit, it hurts your credit more. This is why you should not close any credit accounts you have open after bankruptcy. You should also have a high amount of credit open since the larger the gap, the more it helps your credit.
- Open a Secured Credit Account: After you have saved up some money after bankruptcy, you should use it to open a secured credit account. This is the easiest kind of credit to apply for because it's your own money that you are borrowing. The amount you put down on the card is the amount of credit that you have open. So you are essentially paying yourself back while fixing your credit.
- Use a Co-Signer: If you do need to apply for any kind of credit, whether it be because you are buying a car or a house, you are going to want to utilize the help of a co-signer within the first 7 years after filing for bankruptcy because you will probably not be approved for a high loan such as these within this time frame. Of course, you need to ensure your co-signer that you are going to be making the payments so that they do not suffer any consequences of you not paying off the debt. This will hurt your credit, obviously, and also that person's, as well. However, a co-signer can help you get approved and then you can repair your credit by paying off this large loan on time every month.
- Monitor Your Credit: Be sure that you are continually monitoring your credit. You want to be sure that everything is reporting correctly and it will also show you if there are any accounts that are past due that you need to pay right away to ensure that it doesn't negatively affect your credit. This is the best way to get financial matters organized and prioritized.
These are just four little-known ways you can repair your credit that will seriously help your situation after filing for bankruptcy and so that you don't feel completely helpless within the next 7 years after filing. To learn more, contact a bankruptcy lawyer like David S. Riehl, Attorney At Law.