For many in Arkansas, one of the biggest obstacles to seeking financial relief is the false belief that bankruptcy will lead to permanent and irreversible damage to one’s credit standing. While it is undeniable that bankruptcy will have an immediate negative impact on one’s credit score, that damage can be undone with a mix of discipline and effort. In fact, many who file for personal bankruptcy will have better credit in five years than those who try other means of debt relief. There is no need to put off filing based on worries about bad credit.

Once the bankruptcy process is complete, the first step toward credit repair is obtaining a copy of all three credit reports. Check for any errors, and be ready to challenge anything that seems inaccurate or out-of-date. Federal law allows everyone to get these reports for free on an annual basis. Be wary of any offer that requires a fee to obtain these reports, or that promises to improve credit scores through questionable means. This is a step that is fast, simple and free, and requires no outside assistance.

Next, post-bankruptcy consumers should carefully consider any credit card offers that come their way, and look for the best interest rates and terms when choosing any new line of credit. It is important to be highly disciplined with any new accounts, which should be kept below 30 percent of the available line of credit. Bills should always be paid on time, and consumers should consider signing up for automatic bill payments through their banking institution.

Over time, a responsible approach to credit and a history of discipline when it comes to paying bills will be reflected in improved credit scores. Arkansas residents can take a very proactive approach in credit repair, and many will emerge with far better credit scores than they started with, especially if financial strain was in place for many years prior to filing for bankruptcy. Bad credit can impede one’s ability to purchase a home or vehicle, obtain emergency loans and even find gainful employment. However, there is no reason to believe that bankruptcy is a permanent black mark on one’s credit history.

Source: Forbes, “8 Tips For Getting And Keeping Good Credit“, July 7, 2015