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How can I improve my credit score after Chapter 7 bankruptcy?

| Nov 12, 2020 | Firm News

You filed for Chapter 7 bankruptcy and after going through the bankruptcy process you had many of your debts discharged, leaving you with a clean financial slate. At this point, you may wonder if it is even possible to obtain a personal loan or mortgage to get your life back on track. The following are some tips for people in Miami on some credit options that may help you rebuild your credit after a Chapter 7 bankruptcy discharge.

Secured loans

Secured loans may be an option offered by a credit union or community bank. You make a deposit using your own funds, and then borrow against that money. You cannot access these funds directly while you are paying off the loan. In return, the lender will send a report to credit bureaus regarding your positive payment history on the secured loan.

Secured credit cards

Like secured loans, with a secured credit card you make a deposit. Your credit limit will reflect this deposit. Keep in mind that secured credit cards generally require you to pay an annual fee and interest rates on secured credit cards may be higher than unsecured credit cards.

Co-signed loans

If you have a friend or relative with good credit who is able and willing to be a co-signer on a loan with you, this can be another way to build credit. Note: a co-signer is liable for any missed payments on the loan and could even be responsible for the entire loan amount if you fail to make the necessary payments on the loan.

Become an authorized user

If a friend or relative has a credit card, you could ask them if you can be an authorized user on that card. It is important to ensure the credit card company is reporting your payments to the credit bureaus in order for this option to improve your credit score.

Bankruptcy can lead to a bright financial future

Chapter 7 bankruptcy is the financial lifeline many people in Miami need to obtain a fresh start. It does not ruin your credit forever, and there are steps you can take after your bankruptcy discharge to start rebuilding your credit. This post is for informational purposes and does not contain legal advice. Bankruptcy attorneys may be a useful resource to those who want more information on what their life will look like if they file for Chapter 7 bankruptcy.