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Rebuilding your credit score after filing for bankruptcy

One of the most common questions people ask when they consider filing for bankruptcy is how the filing is going to affect their credit. The cold truth is that filing for bankruptcy is going to damage the filer's credit score, but it is possible to rebuild credit, and you can start doing so immediately. Tennessee residents considering filing for Chapter 7 bankruptcy due to large debt might be interested in learning about the process of rebuilding credit.

Sometimes when financial challenges get too large the only thing a consumer can do is file for bankruptcy. The most common form of bankruptcy in the U.S. is Chapter 7. Chapter 7 bankruptcy allows consumers to get rid of most, if not all of their debt quickly. One of the side effects of filing for bankruptcy, however, is that the filing will damage a person's credit score. But don't despair, a damaged credit score can be repaired with a little work.

One thing that credit counselors and other debt relief professionals tell individuals who have just filed for bankruptcy is to get a secured credit card. A secured credit card is somewhat of a cross between a debit card and a credit card. The cardholder places money in an account as security for future purchases. The card then works like a credit card in stores and the transactions are reported directly to the credit bureau.

Another piece of advice is to not avoid credit cards. Once offers start to coming in (as they always do) it is good to use a credit card, but not too many. Also, follow the quintessential rule with credit cards and only use a credit card if you know you can pay it off immediately. Any late bills or unpaid debt is going to result in future financial problems and continued damage to your credit score. If an unpaid bill is unavoidable, the next best thing, of course, is to keep balances on credit cards and other revolving debt as low as possible.

Source: Market Watch, "How to raise your credit score," Jennifer Waters, June 17, 2013

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
Fax: 423-877-0363
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