Although discharge is the goal of bankruptcy proceedings, the discharge of your debt is really just a starting point for rebuilding your life. Immediately after your discharge, your credit score will be lower than it was before, likely by over a hundred points.
In order to make the most of a bankruptcy discharge, you need to start strategically planning to rebuild your credit. The intelligent and careful use of credit cards is often the first step toward rebuilding excellent credit after bankruptcy.
The sooner you get a credit card, the longer your credit history will be
Bankruptcy doesn’t just discharge your debts. It also eliminates the blemishes on your credit report caused by unpaid balances and overdue revolving lines of credit. Unfortunately, while getting rid of negative marks is beneficial, the process also eliminates earlier history of on-time payments.
In other words, bankruptcy provides you with a bit of a fresh slate, which isn’t really beneficial to your credit score. You’ll want to get a new credit card, even a secured one, as soon as possible to have a long history of on-time payments.
Establishing on-time payments will help you bounce back
When you get new credit cards, you can start using them for small monthly expenses, such as groceries, gasoline for your commute or maybe your utility bills. While working to rebuild your credit, the goal should always be total repayment every month.
Carrying a balance means incurring financing charges. High balances on your card will also drag down your score. You want to use bankruptcy as a stepping stone to better credit practices, like paying your account in full each month. After a year or two of making small charges and regular payments, you will likely qualify for much better credit card terms, if not for larger lines of credit.
An experienced attorney can help protect your rights as you go through the bankruptcy process.