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Ways to rebuild credit

Pennsylvania residents who have filed for bankruptcy in the past may know that it is important to begin rebuilding credit. Obtaining credit may be the first step in proving that handling debt is once again possible. While bankruptcy remains on one's credit report for up to 10 years after it was filed, creditors often look at how both current and prior debts are being handled. If current bills are paid on time, past delinquencies may be overshadowed. Being proactive and applying for a credit card may be another way of showing creditworthiness.

Being approved for an unsecured credit card may be more difficult than obtaining a secured card. Such credit cards require that borrowers use cash as collateral. This means that charges are allowed up to the limit set by the cash amount. However, it is advisable to keep purchases to 20 percent of the limit. It is also important to pay off all charges each month and not use the card more than necessary. If payments are late, it may have a deleterious effect on the user's credit score. Also, it is advisable not to apply for numerous credit options since multiple applications may harm a credit score.

Showing that credit is used sparingly and balances paid on time will ultimately improve one's score. This also shows creditors that the borrower is engaging in debt management practices and is able to live within his or her means. In addition, it is essential to monitor credit reports. If information on the report is false, it is possible to dispute it and have it removed.

An attorney may assist a client whose credit report contains errors that are damaging. This can include writing to the credit bureau or creditors to have the disputed entries resolved.

Source: Nerd Wallet, "How to Rebuild Credit After Bankruptcy", Erin El Issa , December 27, 2014

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