How to Rebuild Your Credit After a Major Crisis

Life is full of unexpected twists and turns, and in some cases, you may find yourself faced with a major personal crisis. Whether you suffered a debilitating injury or lost your home in a hurricane, your credit card and loan expenses can quickly add up to a sizeable debt burden. After the dust settles, you’ll need to act fast to rebuild your credit score and protect yourself from further losses.

If you ever need help with debt relief or filing for bankruptcy, our skilled team at The Buchalter Law Group can help you navigate the process. We have more than 40 years of experience helping our friends and neighbors find solutions to difficult financial problems, and there’s no financial challenge we won’t tackle for our clients.

Managing Debt After a Crisis

Even during good times, building up a great credit score can be hard– just run a Google search on “how to build credit” and you’ll see how many people encounter that very problem. But when you’re dealing with mounting medical expenses or legal fees from a messy divorce, it becomes all the more difficult to observe good credit habits and get a positive rating. This can make you vulnerable to lawsuits, foreclosure, and other damaging financial losses.

Here are some of the ways you can keep your credit healthy in the midst of catastrophe:

  • Know all your lines of credit, inside and out. Make sure to stay on top of any credit card or loan payments, as even one missed payment may compromise your credit score for a while to come. One good trick is to keep digital calendar reminders and track when your minimum payments are due, along with the amounts. You should also check your accounts regularly to see if your recent purchases have affected the amount owed each month.
  • Correct any mistakes as quickly as possible. When you’re going through a complex personal issue like a divorce or an illness, there’s an increased risk that your accounts could be compromised. Don’t let errors or mistakes drag down your score: Check your credit reports often, and contact the credit bureau immediately if you see any mistakes.
  • Keep the credit cards at home. It goes without saying that during times of increased financial distress, you should be cutting back on credit wherever possible. That’s why it’s a good idea to leave most of your credit cards at home, and only bring the ones that you know you can pay off within the next month or so.
  • Don’t go above 30% of the credit limit. If your total credit usage is more than 30% of your available lines of credit, your credit score will suffer serious consequences. Make it a priority to prioritize any cards that start to inch past the 30% mark, and you’ll prevent your score from dropping dangerously low.
  • Think about seeing a credit counselor. Although there are many stigmas surrounding credit counselors, these professionals are trained in helping people regain control of their finances, particularly during times of crisis. When seeking out a credit counselor, be sure to look for someone certified by the National Foundation for Credit Counseling, or another reputable not-for-profit institution.

Are you beginning to worry about the prospect of bankruptcy? If your credit score has dropped too far to correct, contact The Buchalter Law Group at (321) 320-6088. We can review your situation and help you understand all the options available.