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Building credit post-bankruptcy: Part II

Earlier this week, we began discussing the idea of building positive credit. We noted that a bright side of bankruptcy is that it allows you to build solid credit and a firm financial foundation after you have eliminated or restructured the burden of crushing debt. First, it is important to receive your annual free credit score from all three major credit reporting agencies. Once you have your baseline score, you can work at improving it.

First, it is important to understand the agreements that you consent to enter into as you move forward. Credit card companies, car loan lenders and short term lenders can lock you into high interest rates with significant fees for delinquent payment. One of the best ways to improve your credit rating is to pay all of your bills on time. It is nearly impossible to pay your bills on time if you have agreed to pay creditors at rates you cannot afford.

Second, it is important to work towards paying off any remaining debt you may still owe. A key factor in determining credits scores is your ratio of debt to available credit. If you have maxed out all of your available credit, your score will suffer even if you are paying all your creditors on time.

If you take care to improve your credit score, you will be in a better position to receive credit at low interest rates in the future. With time and effort, positive credit can be an unexpected bright side of filing for bankruptcy.

Source: Creditcards.com, "7 building blocks of good credit," Jodi Helmer

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