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How do you rebuild your credit after a Chapter 13 bankruptcy?

Everyone in Washington, D.C., knows that having a bankruptcy on their record can negatively impact their credit report for years, even if the bankruptcy was a Chapter 13. This might seem unfair to you, since under the terms of a Chapter 13 bankruptcy you are repaying a portion or all of your debt over a period of several years. Despite this, many lenders might still see you as a risk, and it can be difficult to obtain credit once you’re ready to move on.

However, the news is not all bad. If you’ve completed a Chapter 13 bankruptcy, you have probably learned a great deal about smart budgeting, living frugally and other financial life-savers that you might not have practiced before. According to Bankrate, you can start repairing your credit soon after your three to five years of debt repayment are up. In some cases, you can even start fixing your credit while you are still going through bankruptcy. Here are a few smart ideas that can help:

  • Be sure to always make your monthly bill payments on time, as your bills comprise a good portion of your credit report.
  • Begin saving part of your income each month for emergencies – 10 percent or more is ideal, but anything you can afford is better than nothing.
  • Talk to your bank about opening a credit card with a small balance or a secured credit card to begin raising your credit score.
  • Avoid loans with exorbitant interest rates, which can be common after a bankruptcy. It may be best to wait until your credit score is above 650 to get better rates.
  • Regularly review your credit report with the three major credit reporting agencies.

Also, during the months after a bankruptcy you should be careful to steer clear of scammers who prey on those recovering from financial problems. This is also true for payday loans, which can get you back into financial trouble.

You may be able to obtain sizeable loans soon after a Chapter 13 bankruptcy, such as a car loan or even a home mortgage, if you manage your money carefully and take steps to remain in good standing with your creditors. It is important to understand that this information is meant to inform you about your debt relief options and is not to be taken as legal advice.

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