Rebuilding Credit After Bankruptcy
If you’re trying to get back on your feet after a bankruptcy, you aren’t alone. According to the U.S. Bankruptcy Court, 1.2 million Americans filed for bankruptcy in 2012 alone.
To get your financial life on track again, you’ll need to rebuild your credit rating. While this won’t be easy, there are a few things you can do to get started right away.
1. Take out a secured credit card.
To start building up your credit score again, you’ll need some type of debt to pay off. This gives you a chance to make on-time monthly payments and shows you are now responsible with your financial obligations.
While your bankruptcy will disqualify you from most loans and credit cards, you’ll still be able to take out a secured credit card.
To use a secured credit card, you need to make a deposit for your credit limit. For example, if you deposit $500, you can spend up to $500 on your card.
Paying off your purchases on these cards builds up your credit rating, just like a regular credit card. This is a way to start improving your score immediately after your bankruptcy.
2. Avoid credit mistakes.
Your bankruptcy is already a large drag on your credit score. Don’t make things worse with more credit mistakes.
If you have a secured credit card or other type of debt, make all the minimum payments on time.
Now that your debts all clear, be sure to pay off all your balances each month so you don’t get in financial trouble again.
“Don’t make things worse
with more credit mistakes.”
3. Review your credit score.
Soon after your bankruptcy, you should request a copy of your credit score from one of the major rating bureaus. This report will show you exactly how damaged your credit score is and can help you plan where you want to be in the future.
Try to check your credit score every six months to a year to make sure you are improving over time.
4. Work with your bank.
Your bank can be a valuable ally for rebuilding your credit. If you don’t have one already, go set up a checking or savings account at a local bank.
From there, ask to speak to a bank representative and explain your situation. Let them know you are trying to rebuild your credit score and ask if they can help.
Try to find out at what point you’ll be able to take out a small bank loan. A loan from a bank looks even better on your credit report than a credit card, so this is a financial goal you should try to reach as soon as possible.
While bankruptcy is a major financial issue, it’s an issue you can definitely recover from. Follow this advice and your credit will be back in shape before you know it.
Photo source: lunariafinancial.com.