The goal is to get back in the game — the game of credit. But to do that, you must increase your credit score.
The first rule to get a higher FICO score is to pay your debts on time. Without that, you will never get the score you deserve — and can get, even after a bankruptcy.
The next step is to lower your utilization rate to at least 30% or below.
What is a utilization rate? This is the percentage of your credit limit that you actually use. The ratio between your balance and your credit limit! To calculate your utilization rate, take your balance and divide it by the credit limit and you will know your rate.
As an example, if you have a credit card with a limit of $2,000, but your balance is $1500, then your utilization rate equals $1500 divided by $2000, or 75%, which is way too high. The goal is to get that rate down to 30%. So come up with a plan and tackle the highest interest rate credit card first, and then the next highest.
How soon do you plan on applying for credit? For a car? Or a house? Or even car insurance? Almost everything you buy nowadays uses your Credit Score to set your interest rate. One card at a time will get those balances down. Your credit score depends upon it! Come up with a Plan to get the utilization rate down, so you can enjoy the benefits of a higher credit score!.
Sometimes, a bankruptcy can even help increase your score. Sometimes it is the best way to reduce those credit card balances. Even bankruptcy can be part of your financial planning. Just ask Donald Trump!