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How to rebuild your credit score after bankruptcy

Many people fear the drop in their credit score that accompanies a personal bankruptcy filing. It is true that Florida consumers will experience an initial drop in their scores after bankruptcy, but the bigger credit picture is often far more favorable than many believe. There are many ways to begin rebuilding credit following the end of a bankruptcy proceeding, and many consumers are able to emerge with better scores than they had before their financial troubles began.

One tactic that can lead to a steady increase in credit scoring is to “piggyback” onto the credit record of a close friend or family member. When a consumer is added as an authorized user on another person’s account, their score will increase as time passes with good credit management practices being employed by the primary account holder. This is a common credit-building tactic that parents use to give their kids a boost in building a strong credit score. The same result can be gained by an individual emerging from personal bankruptcy.

Another way to rebuild credit scores quickly is to ensure that your balance never exceeds between 10 to 30 percent of your available credit limit. Maintaining a low balance leads to higher scores. One way to ensure that you do not cross this threshold is to make frequent payments on the account within the same billing cycle. This is especially helpful if you use the card frequently, since it may be difficult to predict when the card issuer will report your account activity to the credit bureaus.

By taking an aggressive approach to rebuilding your credit score, it is possible to mitigate the negative effects of a personal bankruptcy filing. In fact, once a Florida consumer is able to eliminate outstanding debt obligations through the discharge process, managing credit can be a far easier task. No one should postpone filing for bankruptcy due to concerns over the impact on their credit score, and consumers should remember that the path back to good credit is often shorter with bankruptcy than without it.

Source: ABC News, 4 (Perfectly Legal) Hacks to Improve Your Credit Score, Christine Digangi, March 26, 2014

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