Robert J. Adams and Associates
Rebuilding My Credit After Bankruptcy. Part 2
- Upon filing a Chapter 7 your debt-to-income ratio drops dramatically. Try to keep it low.
- Create a realistic budget so you can pay all bills on time.
- Get your credit reports again. This time you may have to pay a small fee. You want to be sure all your debts are marked “discharged.” Also, check your credit score again.
- Get a secured credit card and pay the balance in full each month. Paying off your balances will boost your credit score.
- Get an auto loan but be wary. There are unscrupulous used car dealers who will sell cars much over value at high interest rates. Buy a modest car with payments you can easily afford. Be sure to know the estimated values of cars. Some well-known sites include kbb.com and www.nadaguides.com and www.cars.com.
- Whether you reaffirm an existing car loan or get a new car loan-pay on time-never be late.
- It is best to have 2 credit cards. Even if they are secured credit cards.
- If you are declined credit from a company based on a new credit report you are legally entitled to get a free copy of that report. Look for errors and bad marks.
- Once a year get your free credit reports and review them. If there are errors (and there often are) you have the right correct them.
- Be prepared to walk away from a bad deal. High interest can prevent you from getting back on track.
- Even one late payment can drop your credit score 50 points.Avoid credit repair agencies, they’re often rip-offs and don’t do anything you can’t already do yourself.
- Never use a Pay Day or a Car Title Loan. They are endless money pits.
- Only get a store credit card if you shop there and pay the balance as fast as possible. Too many credit applications can hurt your credit score.
- Avoid getting cash advances on a credit card. It looks suspicious to the credit agencies.