Rebuilding your credit after bankruptcy in Suffolk County and Essex County

1. Understand Your Current Credit Situation:

• Get Your Credit Reports: After your bankruptcy is discharged, obtain free copies of your credit reports from all three major credit bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com.

Review for Accuracy: This step is crucial. Carefully check for any errors. Ensure that accounts discharged in bankruptcy are reported as “discharged in bankruptcy” with a $0 balance. Dispute any inaccuracies immediately. This ensures that your credit report accurately reflects your bankruptcy status.

2. Establish a New, Positive Credit History:

• Secured Credit Cards: These are often the easiest type of credit card to get after bankruptcy. You provide a cash deposit that acts as your credit limit. Use it for small, manageable purchases and pay the balance in full every month. This demonstrates responsible credit usage to the credit bureaus.
• Credit-Builder Loans: Some banks and credit unions offer these. The money you borrow is held in a savings account while you make regular payments. Once the loan is paid off, you receive the money, and your on-time payments are reported to credit bureaus.
• Become an Authorized User: This is a strategy that can work in your favor. If you have a trusted family member or friend with excellent credit, ask if they’d be willing to add you as an authorized user on one of their credit cards. Their positive payment history can reflect on your report, but be aware that their missteps could also affect you.
• Small Personal Loans: If you can qualify for a small personal loan from a local bank or credit union, making consistent, on-time payments can also help.

3. Practice Excellent Financial Habits:

• Pay All Bills On Time: This is the most crucial factor in your credit score. Make sure all your remaining bills – including rent, utilities, cell phone, and any new loans or credit cards – are paid by the due date, every time. Consider setting up automatic payments.
• Create and Stick to a Budget: A detailed budget helps you manage your income and expenses, preventing you from overspending and accumulating new debt.
• Keep Credit Utilization Low: If you have new credit cards, aim to keep your balances below 30% of your credit limit. For example, if you have a $500 limit, try to keep your balance under $150.
• Avoid Taking on Too Much New Debt: Be cautious about applying for too many new credit accounts at once, as each application can result in a “hard inquiry” that temporarily lowers your score.
• Build an Emergency Fund: Having savings to cover unexpected expenses reduces your reliance on credit in a pinch.

Local Resources in Suffolk and Essex Counties, MA:

We can help you rebuild your credit after bankruptcy. For a free attorney consultation, While the general principles of credit rebuilding are universal, some bankruptcy attorneys and financial advisors in your area may offer specific programs or resources.

• Bankruptcy Attorneys: Many bankruptcy law firms in Suffolk and Essex Counties (like Coleman & MacDonald Law Office offer guidance on credit repair as part of their services, sometimes even partnering with credit education programs. They can also help ensure that discharged debts are accurately reported in your credit report.
• Credit Counseling Agencies: Non-profit credit counseling agencies can provide personalized advice on budgeting and debt management, even after bankruptcy.
• Local Banks and Credit Unions: Explore secured credit card and credit-builder loan options with local financial institutions in your specific county, as they may be more familiar with the needs of residents.

Important Considerations:

• Beware of Scams: Be wary of “credit repair” companies that promise to remove accurate negative information from your credit report or charge upfront fees for services.
• Understand Bankruptcy’s Impact: While it negatively impacts your credit initially, bankruptcy eliminates overwhelming debt, which can actually improve your debt-to-income ratio and make you a more attractive borrower in the long run. Many lenders see post-bankruptcy filers as a better risk because they are prohibited from filing again for a certain period. 
• By following these steps and maintaining responsible financial habits, you can effectively rebuild your credit after bankruptcy in Suffolk County and Essex County, MA, and work towards a stronger financial future. Communities We Serve – Essex County, Massachusetts