Articles Tagged with Rebuild Credit

building-credit-300x177Managing your money: Step one to building credit. It may seem like a step backwards, but before you can build and/or rebuild your credit, you must first make sure you have laid a solid financial foundation based on proper management of your money. You must be able to manage what you have before you can increase and expect what you are building to stand.

So let’s take a moment and talk about managing your money. In order to begin managing your money, you must first know exactly how much you have now and will have on an ongoing basis (your income). Then you must know how much you spend (your expenses). Start with the money you earn. What is your Gross (before taxes & deductions) income?  Review your deductions – are you paying enough tax, too little tax? Are your other deductions in line with what you need? Are you carving out at least a minimum of savings for retirement? Now let’s take a look at your Net (take home) income.  Be sure you are looking at this amount as a “monthly” number. Next, list out all your expenses that must be paid from that Net income. House/Rent, food, gas, lights, etc. Everything. Trips to the candy store. All of it. You can look at your bank statements or receipts to get an idea of what the average costs are and to be sure you haven’t missed anything.  The most common issue people have when they get into financial trouble is that they do not know their numbers. Maybe round about – but money spent without a plan is usually much more than you would spend with a plan. 
Once you have both numbers – total income and total expenses – subtract your expenses from your income. Do you have money left? Are you breaking even or are you in the hole?  Now that you have an answer – it’s time to start making management decisions about your money. If your expenses are already at a minimum, what can you do to earn more? If your income cannot be changed, what can you do to spend less? 


Are you being haunted by a low credit score? We know how our credit score is a huge part of our financial picture. Having bad credit can cost you money (not qualifying for a particular job) and missed opportunities (paying higher interest rates, higher insurance premiums, and not being able to qualify for loans).  If your credit score has become something that sabotages your financial goals at every turn, fear not. It doesn’t take magic to bring your credit score back to life: just some good old fashioned time and effort that involves clean up of what’s out there and careful movement going forward.

The first thing you should do

Take a good, honest look at your monthly budget. Are your debts far outweighing your income? Can you pay off your debt within a reasonable amount of time without stress, anxiety, lack of sleep, lack of necessities due to working more than 1 job? Before you worry about bringing that credit score up, get your budget into a workable position. If you work on your credit but your income can’t sustain your debt level, you won’t get very far.  We offer free consultations regarding the options that bankruptcy brings to the table.  Bankruptcy can clean the slate and help you to rebuild so much faster.  Typically your score takes a 30-50 point hit when you file, but the clean up and rebuild is so much faster.  You can recover that and build in 12-18 months rather than killing yourself for up to seven years trying to out live the negative items reported.  If your income to debt ratio is under control, then dive right in and get that credit score up!

How does bankruptcy affect my credit? Bankruptcy has a negative impact on your credit, but it’s the road to credit recovery, not a death sentence to your credit.  Think for a moment – if you are already behind on payments and debts – your credit couldn’t get much worse than it is now.  Bankruptcy improves your credit by getting rid of all the debt that is keeping you down.  Your debt to income ratio is hurting you as much as the late payments and no payments.  Most people will find their credit will recover within 1 year of filing a Chapter 7 bankruptcy.  Believe it or not, you’ll get credit card offers flooding your mailbox right after you file bankruptcy.  You could also go out and buy a car right after you file bankruptcy, but you wouldn’t be happy with the interest rate they put on the loan.

Bankruptcy doesn’t affect your ability to get credit as much as it affects the cost of your credit.  I have a credit instruction package I give to my clients that gives step by step directions for getting your credit score where it should be, where you can qualify for the better interest rates. So if you’re wondering “Will I ever get credit again?”, YES, you can have good credit again and a lot sooner than you think.

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