1. Review Your Credit Report
The first step in BOOSTING your credit score is to obtain your credit report. You can get your credit report at http://www.FreeCreditReport.com or other similar sites. Its really important to understand what exactly is on your credit report, and to make certain there are no errors or inconsistencies. FreeCreditReport.com will breakdown and give you an overview of your credit report with an explanation. You can also obtain your credit report from Experian, Transunion, or Equifax once a year for free as well.
2. Pay Bills On Time
How you pay your bills makes up 35% of your credit score. The fastest and easiest way to improve your credit score is to pay all of your bills on time each month. You can set up reminders on your calendar, smart phone, or desk calendar. You can also set up auto drafts with your bank. Its time to budget and get on a good schedule. Most often these services are FREE!
3. Apply for Credit **CAUTION**
Typically during your bankruptcy (usually a chapter 7) or soon after your discharge, you’ll start to receive credit card offers. Definitely apply. You need to have a credit card, not only for emergencies, but to rebuild and BOOST your credit score. The credit cards you do receive will be a very low limit, with a very high interest rate. You want to start using these cards so that the credit cards can start reporting to the credit bureaus. Sometimes you’ll have to seek out whats called “secured credit cards”. A secured credit card is one which requires an upfront deposit. For example, you pay the secured credit card company $300, and now you have a $300 credit card. It is also not necessary to carry a balance, you are allowed to pay your bill off at the end of every month. Just be sure to be ON TIME!
4. Try a small loan
“Good credit, bad credit, no credit, ANY credit”… we’ve all seen these types of signs at used car dealerships, and rent-a-centers in our area’s. Once you’re a few months out of bankruptcy, you should try to get a car loan. Get something that is affordable. For example, if you got a used car for $7,500 and put $5,000 down, you could finance $2,000 over 3 years. Your monthly payment will be very low, and this installment loan will BOOST your credit score. Be certain to look for competitive rates.
5. Careful of companies claiming to Fix your credit
You might receive mail from companies claiming to be able to “magically” clean your credit up and sky rocket your score. Please do your homework and be certain to investigate them fully. Also be careful of fees they may charge. This IS something you can do yourself, and you don’t necessarily need a company to do it for you.
6. Don’t run-a-muck
Don’t go cRaZy with your new found credit. You need to understand and appreciate balance. When you get your first credit card, you will be tempted to go out and spend, spend, spend; don’t don’t don’t! Resist this temptation, as you don’t want to be stuck in a similar situation and file bankruptcy again. Be cautious, and careful. Your credit score is fragile.
7. DON’T close your credit card accounts.
Your credit report history is only as good as your longest credit history. If you close an account that you’re not using, you will hurt your credit score. If you are worried about using a card, and don’t want to be tempted, shred it, and keep that card open. Also, if you close an account with available credit, then its possible that you will inadvertently reduce your overall amount of credit you have.