How can I restore my credit after I file?

Follow these steps to restore credit after bankruptcy

So you just filed for chapter seven bankruptcy, what should you do next? Now is the perfect time to take action and start laying the groundwork for a healthy financial future. One of the first questions you will need to ask yourself is whether you want to get back in the credit game.

Now there are a lot of good arguments for never going into debt again. Living a debt free lifestyle gives you a tremendous amount of financial freedom and flexibility. And I think most people agree that it is best not to be beholden to creditors. But unfortunately, that is not always possible. So how do you restore your credit after you file for bankruptcy?

STEP ONE: Fortunately, building up your credit is not hard. All you need to do is to take some simple steps to restore your credit rating. The first thing you need to do is to keep a close eye on your credit report. Often times, credit reports will not properly reflect that some of your accounts have been closed in your bankruptcy. If you still have an account marked as open that has been discharged in bankruptcy, you need to get that account closed immediately.

STEP TWO: The next thing you need to do is to establish some new accounts. Think baby steps. Go and get a credit card, or a secured credit card. Whatever you do, make sure you do not go crazy with this card. Pay off the balance at the end of every month. And if you sense that you are falling behind, do whatever you need to do to get caught up. Get a second job, sell some stuff on cragslist… do whatever you need to do not to carry a balance. The point is that you have to learn new spending habits. And one of the best habits you can get in to is to not carry a balance from month to month.

STEP THREE: The next step is to get some type of installment loan. A good example is a car loan or an installment loan for appliances. But first, a word of warning. Be prepared to pay outrageous rates for the first year or two. Unfortunately, this is just the price you have to pay to get back in the credit game. You can, however, mitigate how much this is going to cost. For example, if you get a car loan, get the loan for a relatively small amount, and then concentrate on paying it off quickly. After that, you are probably ready to get a mortgage, if necessary. Again, expect to pay higher interest rates at first.

Ultimately, I think most people have the goal of not needing credit. But if you find yourself wanting to get back in the credit game, remember to follow a plan that will allow you to build your credit while still building your financial future. Remember, you can have great credit and be flat broke. So keep your focus on building wealth and only use your credit as a tool to get you to your ultimate goal.

Jacob McElwee Topeka Bankruptcy Attorney