How to Increase Your Credit Score After a Bankruptcy Discharge

After undergoing a hard time due to debts and it becomes clear that you may not manage to settle all of them because of losses incurred or loss of livelihood, you may apply for bankruptcy. This is a legal process that enables debtors to be relieved from all or some of their debts. In most of the jurisdictions, bankruptcy is usually enforced by a court order, normally initiated by the debtor. Bankruptcy discharge relieves the debtor from being legally required to pay the discharged debts.

Though filing for bankruptcy may mark the beginning of the journey to financial recovery and rebuilding your credit, you must put in some effort. You will also need to focus on the process and allow some reasonable time to realize the desired results.

Below are some ways that may assist you in repairing your credit after bankruptcy:

Scrutinize your credit report frequently to flag any errors

According to a Federal Trade Commission study in 2012, around 25 percent of American users spotted errors in their credit reports that may have negatively affected their credit rating. It is crucial to check your credit report frequently so that you can pick out any errors and dispute them. You should comb through your credit reports after discharge to ensure the following:

·         All of the accounts that were discharged are reported.

·         The balance for the discharged accounts is zero.

·         The date on which you filed for bankruptcy is correct.

You should follow the due process to dispute any errors you find in your report.

Get added as an authorized user on a well-performing account

While you could get a close friend or relative to add you as an authorized user to their credit card account, this may not always be possible since you may lack a person that is willing to do so. This is where credit repair experts come in to help you to get seasoned tradelines at a fee. Repair firms will find accounts with a good history and timely repayment patterns so that you can be added to them as an authorized user. You can then ride on their positive history, which will boost your score and enable you to use your card in your name. You can click over here now to learn more on how credit boosting works.

Go for products suited to your circumstances

Although your pre-bankruptcy borrowing and repayment patterns may paint you out as a very risky borrower, you can seek to assure the lenders that you will meet your obligations. The following products can help you to improve your score while you also get the much-needed financing:

·         Secured credit card: This is secured by the deposit that you pay. Normally, the credit limit will be equal to the amount of deposit. The disadvantages of this card are that it may have annual charges and attract high interest rates. However, you will not have it for a long time and you can use it to repair your credit until you can qualify for a less expensive unsecured card.

·         Secured loan: This may be either in one of two kinds. You may get a loan against some deposited amount which will not be accessible to you before repaying the loan. The other kind does not need cash upfront, but the loan amount is placed in a savings account and is only accessible to you after making the required payments. In return, the lender offers to send your payment history report to the credit bureaus.

·         Co-signed loan or credit card: This involves getting a friend or relative with an impressive score who can agree to co-sign for you. The co-signer will be held liable in case you default and may experience limits on their borrowing due to the additional debt. One has to be careful because co-signing can damage relationships if the borrower defaults.

The Bottom Line

After a bankruptcy discharge, the most critical thing is winning back the lenders' trust by showing them that you plan to meet your obligations as agreed. You can do this through such facilities like secured loans and cards. You also need to pay on time and keep your balances low relative to the credit limit, not more than 30%. It is also critical to keep an eye on your credit report to dispute any errors that may hurt your credit score.