Excessive debt might prove so massive that a person files for bankruptcy in California. This process provides a way to resolve the situation and find a fresh start. Some might worry about the negative impact Chapter 7 or 13 has on a credit score, but there are ways to rebuild credit once bankruptcy ends.
Rebuilding credit
Time can address some issues with a poor credit score after bankruptcy. Chapter 13 bankruptcy falls off a credit report after ten years, while chapter 7 bankruptcy disappears after ten years. Once the statutorily designated time ends, bankruptcy proceedings no longer bring a credit score down. Of course, many people will wonder how to improve their credit long before those many years elapse. A few established steps may help:
- Review the credit history
- Curtail excessive borrowing
- Apply for secured credit
- Explore options for opening a joint credit account.
Reviewing a credit report helps with locating any errors present. Inaccurate information harms a credit score, and removing false items could improve things. Some data reported to the credit bureaus help, such as timely payments. Making sure any payments to creditors, utility companies and others get reported may be advisable.
Post-bankruptcy borrowing
Excessive borrowing often leads people into troubles that result in filing for bankruptcy. However, borrowing and repaying debts help rebuild credit scores. While a previous bankruptcy might hurt someone’s ability to acquire unsecured credit, accessing secured credit might be less difficult. A secured credit that requires a temporary deposit may provide a way to use a low-limit card where the payments establish a track record of responsibility.
A relative or another person could add someone struggling after bankruptcy to their credit accounts. Both account holders would be responsible for any accrued debt so this option may have risks. However, it also provides a means of improving one’s credit history post-bankruptcy.