Credit Re-Establishment Timeline

Clients are often concerned about how long it will take to re-establish credit after they file bankruptcy. We go over this, and more, in a Free Initial Consultation. (Call 210-930-7000if you would like to schedule a consultation.) Here are some important points to remember:

Rebuilding your credit takes time.

Do not wait until you need financing to check your credit.

First Step (month 2) : Once your case discharged, make sure that you send the bankruptcy filing notice, petition, list of creditors, and the discharge notice to all THREE Credit Bureaus (Experion, Transunion, Equifax).

Second Step (month 6): Make sure to pull all three credit bureaus every 6 months. If there is information is not accurate, file a dispute report with the bureaus until all reports are accurate.

Make sure that all reports show current accounts. Examples may include: a mortgage that you are continuing to pay; a vehicle that is still receiving payments; student loans that you are current on the monthly payments.
Make sure that the credit bureaus are reporting all accounts that have been reaffirmed.
Lastly, make sure that all the accounts show that you received a discharge in bankruptcy. This means that your accounts show a zero balance and there are NOT any derogatory comments concerning accounts besides reference to bankruptcy.

Third Step (month 6): I know that this is going to sound weird but you need to apply for a secured credit card. A secured credit card is a credit card that requires a security deposit in order to receive credit.

Be very careful with Credit Offers. Carefully read any credit card or other credit offer from a company that claims to represent a lender you listed in your bankruptcy or own a debt you discharged. This may be from a debt collection company that is trying to trick you into reaffirming a debt. The fine print of the credit offer or agreement will likely say that you will get new credit, but only if some or all of the balance from the discharge debt is added to the new account
Avoid high cost predatory lenders – Don’t assume that because you filed for bankruptcy you will have to get credit on the worst terms. If you cannot get credit on decent terms right after bankruptcy, it may be better to wait. Most lenders will not hold the bankruptcy against you if after a few years you can show that you have avoided problems and can manage your debts.

Below are 10 things to think about before you use your credit card:

Establish a realistic budget
It is important not to use credit cards to make up for a budget shortfall
If you get into financial trouble, do not make it worse by using credit cards to make ends meet.
Do not get hooked on minimum payments – this will probably only pay for the interest on the credit card and nothing towards the balance. Pay more than the minimum.
Don’t run up the balance based on a temporary low interest rate.
Avoid the special services and programs credit card lenders offer to bill to your card.
If you can afford to do so, always make your credit card payments on time.
Know exactly your grace period.
Beware of unsolicited increases

Fourth Step (month 12): Apply for another secured credit card. I know that you are definitely wondering “WHY” are we recommending that you get into new debt when you have just received relief on old debt. The reason is… in order to re-establish your credit, you must be able to obtain credit and show that you are able to manage your new credit.

Fifth Step (month 24): Apply for a Store Secured Credit Account. They will most likely give you a low balance credit limit but any credit can be turned into good credit. Remember, it’s not the amount that helps, it’s the on-time monthly payments that show your current abilities. You can apply for another Store Credit Account in 6 months if you wish.

TIPS TO REMEMBER:

Make sure that you are paying all of your accounts early or on time
You can apply for credit no more than once every six months
THIS LAST ONE IS IMPORTANT – Credit terms are usually negotiable, so don’t settle for their first offer. Also, you may want to shop 3 or 4 lenders for the best offer.

Start planning NOW….

Call for a FREE Consultation at 210-930-7000.

I CAN’T HELP YOU UNTIL YOU CALL!