How to Fix Your Credit Report After Bankruptcy

poor credit reportBankruptcy in Mobile, AL tends to be one of three massive changes one goes through financially. The other two are divorce and a partner’s death, resulting in probate. While most folks don’t necessarily go through all three, each is dramatic in its own right, and bankruptcy chapter 7 Mobile AL proceedings are becoming far more common today than they have in the past. However, once through the process with an Alabama bankruptcy lawyer and on the other side with a judgment and clearing of past debts, then comes the longer challenge of rebuilding one’s credit. The process will likely have stripped a person of all accounts, assets and property that can be liquidated. What’s left is basic living and no financial burdens. Now comes the challenge of starting over again with a black mark on one’s record. On the bright side, there’s no need for debt consolidation in Mobile AL anymore once cleared by the court.

The traditional advice from AL Mobile attorneys is that it takes seven years before one can reasonably even think of asking for credit again to borrow money, whether it be a credit card or home loan. However, a lot of that perspective changed after 2009 and the related real estate recession. Since then, and the huge numbers of people who did go bankrupt in those years right after, the entire financial system has changed. Digital processing of records and one’s financial status has also ramped up tremendously as well.

The first step anyone coming out of bankruptcy should focus on is building a new window of financial history. That only happens by paying bills timely, paying off any short or small amount of debts quickly and completely, and not getting into any more problems. The more time and good payment cycles one can build up between the date of the final disposition and current status, the better. This typically starts to be realized about two years out. Auto-payments tend to solve any risk of a missed payment pretty well. Then all one has to do is focus on having enough money in the bank account before the auto-payments come due each month. Time things for the 5th of the month, which gives enough time for paychecks and similar to deposit on the 1st.  

Start building a new credit history with small loans and lines of credit. Yes, it might seem a bit insulting to have a credit card with an allowed balance of only $100 or $300 on it but use it. The idea is to borrow a little and pay it off regularly. This helps towards a positive credit record and allows new lenders to see consistent payment and discipline again in your record. However, don’t go running out and asking for every small credit card out there. Instead, focus on the ones that there is a pretty good chance of getting and secure two of them. Then work on the history-building.

Consider a co-signed loan to help build up your larger credit worthiness again. Doing so will require you to have a partner who is willing to cover the risk of your loan in case there is a problem, ergo the co-signer. Usually, a family member is your most likely bet, as very few friends are typically willing to get involved so deeply in financial issues. If successful, this will help build a history of different types of credit versus just a credit card alone.

Avoid bouncing around in jobs while you’re working on rebuilding your credit. Each time a job changes, it impacts your credit score, since both income and a verified employer make up a core part of your credit worthiness. Stable employment scores higher points and reflects better in the long-term on your borrowing strength. If you find yourself needing more income, consider instead freelancing or picking up a second job instead. The Internet is full of opportunities one can work on by computer, bringing in an extra paycheck at night after a regular workday.

If you’re really struggling and running into perception issues trying to get credit again, the Loris Bankruptcy Law Firm can help. As a bankruptcy attorney Baldwin County resource and an expert on Mobile Alabama debt consolidation, Loris Law and team can help square up credit records that might be misrepresenting your actual situation or past.