Improving Your Credit Score After

Filing Bankruptcy in MichiganLaw Offices of Walter Metzen & Associates

Tips to Improve Your Credit Score

One of the most common questions or concerns bankruptcy attorneys hear form their clients are “How can I improve my credit score after filing bankruptcy?” and “When will I be able to purchase a house or car after bankruptcy?”

If the best thing to do after filing bankruptcy is to avoid credit cards and to purchase used vehicles with cash from savings or a tax refund, if possible, there are a few things that can help raise your credit score.

Pay Your Bills on Time

The best way to improve and maintain your credit score is simply to pay your bills on time.

This seems simple enough, but it’s easy to forget to pay a bill on time, and this can be very damaging to your credit report. There are several tools that can help you to stay on track.

Up until just a few years ago, everyone had to write out a paper check and mail it to the creditor, in time to make it there before the due date.

These days, most companies offer some sort of an auto-pay feature in which your monthly payment will automatically be deducted from your bank account or debit card.

Most banks, like Chase, offer an online bill pay system that can help pay on time. In my opinion, paying your bills on time and never being late is the best way to improve your credit score after bankruptcy.

Use Credit Cards (Wisely)

Many receive credit card offers in the mail within a few months after filing their bankruptcy. Probably most of them never want to see a credit card again and destroy these offers. Good for them. Contrary to what many people say, you do NOT need a credit card to live in today’s society.

Although, credit cards can be a good way to keep track of your finances, pay other bills on time with your credit card and its automatic payment feature and are a good way to re-establish your credit after filing bankruptcy.

Use credit cards for small purchases only and pay them in in full every month if possible. That way you won’t be paying any interest. Always pay them on time.

If you miss payment due dates, you will have to pay a ton of interest and likely end up getting caught in a credit card debt trap again.

Get Credit Report at Least Once a Year

Almost every credit report I’ve ever seen has had some errors on it.

Federal law allows you to go online and get a free copy of your credit report from the major credit reporting bureaus and review them for accuracy. The big three credit reporting agencies are Equifax, Experian and TransUnion and can all be accessed from AnnualCreditReport.com.

All three bureaus have online forms, in which you can dispute information that you believe is inaccurate. It’s easy and you can do it yourself.

Don’t waste money on companies that offer to repair your credit. Credit bureaus are allowed to report all true and accurate information related to your credit history. Any company that promises that they can remove information that is true and accurate is most likely some sort of scam.

If there is wrong information or other inaccuracies on your credit report, you can legally remove them, you don’t need a company to do this for you.

Finance a Car

The best car for most people is a car that is completely paid for and still gets you to work, the grocery store, doctor’s office, etc. If you plan to buy a car, probably the best option is purchase used cars with cash from savings or a tax refund, etc. But if it’s hard or impossible for you to pay a car in full, be careful and shop wisely.

Financing a good car with a reasonable monthly payment can help you rebuild your credit after bankruptcy.

Many car dealerships in the metro Detroit area will mail financing offers to people during or shortly after their bankruptcy filing. Most of them will actually get a better interest rate after they receive their bankruptcy discharge than they would have before the bankruptcy was filed.

Again, be cautious and try to put down as much money as possible. Be sure to ask about the finance charges. Avoid paying for extras like life insurance or expensive warranties and be sure to shop around for the best interest rate possible.