Rebuilding Your Credit After Bankruptcy (2024)

Bankruptcy is one of the most stressful periods of any person’s life whether you’re based in Utah or California.

And while bankruptcy makes you financially exhausted, it also does tremendous damage to your credit score. A bad credit history, in turn, prevents you from obtaining credit and getting good rates.

Luckily for you, our Salt Lake City bankruptcy attorneys at Justin M. Myers, Attorney-at-Law, LLC know how to help you rebuild your credit after bankruptcy through a combination of healthy financial habits.

Guide: how to rebuild your credit after bankruptcy

Be consistent for a long period of time. Better yet, be consistent with your finances always. Pay your bills on time and, if you have any credit obligations, address them in a timely manner.

Keep in mind that delinquencies (a missed payment of one month) stay on your credit report for seven years before going away.

Analyze your credit report. When reviewing your credit report, set realistic goals about rebuilding credit after bankruptcy. Aim to get a score of at least over 700, but reaching the “excellent” score of 750-850 is obviously a priority.

Consult an experienced bankruptcy attorney to set up a customized plan of rebuilding your credit to reach the excellent score of 750-850 as soon as possible.

Dispute any incorrect or inconsistent info on your credit report. Seek the legal advice of a Salt Lake City bankruptcy lawyer to dispute any incorrect information that appears on your credit report, for example paid debts that are listed as unpaid.

Be smart about your budget. It’s essential to know exactly how much money you make in a month and how much you spend each month. Budgeting allows you to be consistent about creating savings and reducing non-essential expenses (the holidays are over, so many non-essential expenses can be eliminated).

Being smart about your budget also allows you to be consistent with on-time bill payments and be able to pay for unexpected bills in emergency situations. Speaking of on-time bill payments…

Pay your bills on time. There’s not much to say about this one other than warning you that a payment history accounts for more than a third of your credit score.

Put a little bit away in savings. Generally, it is advised to put between 5 and 10 percent of your monthly income away in savings, but saving any amount is always a good idea (this helps avoid using credit in case an expected expense comes up).

Fact: studies show that having as little as $250 in savings can be enough to protect you from resorting to credit in case of emergency.

Get a new checking and savings account. Our bankruptcy attorneys at Justin M. Myers, Attorney-at-Law, LLC advise people recovering from bankruptcy to open a checking and a savings account at a local bank or credit union (consider the interest rates and fees before opening accounts).

You need a secured credit card. You may want to avoid using debit cards when rebuilding credit after bankruptcy, as these cards take money straight from your bank account. Using a secured credit card, on the other hand, is credit-friendly as it allows you to borrow money and pay it over time.

Pay off the balance every month. Failing to pay off your balance regularly can negatively affect your credit score.

Stay away from finance companies. It may be tempting to get help from finance companies, but our bankruptcy attorneys advise you to avoid them. After all, these companies only help you to make a profit at your expense.

If you feel as if going through it alone is challenging and you need guidance in rebuilding your credit after bankruptcy, reach out to one of our best Salt Lake City bankruptcy attorneys to get a personalized plan about budgeting, savings and maintaining a good credit score.

Call the offices of Justin M. Myers, Attorney-at-Law, LLC at 1-801-505-9679 or complete this contact form to get a free initial consultation.