After enduring all the financial hardship and stress that accompanies bankruptcy you now have a clean slate to build your new credit profile. Rebuilding may seem scary but it actually can be simpler than you think. If you make the right moves, your credit score can actually be higher one year after filing bankruptcy than it was before you filed because you no longer are fighting to stay afloat or trying to dodge the creditors you are in debt to. Even though bankruptcy can stay on your credit report for up to ten years, it is possible to salvage your credit score and start rebuilding your financial creditability and personal finances. Here are a few ways to start on this journey.
Check your score and reports
Checking your credit score and credit reports monthly can help you make sure that there aren’t any discrepancies you aren’t aware of lingering around. If you see inaccurate information, its best to immediately dispute it and get them corrected. It’s important to note that by filing for bankruptcy you are wiped clean from your debts personally but the record of them will remain on your credit report for a number of years until it eventually falls off. If you filed for chapter 7 bankruptcy you will see it listed on your records for 10 years and if you filed for chapter 13 it will stay for 7 years.
Apply for secured loans or credit cards
The unsecured loans or credit cards you had before the bankruptcy may have been the sources that got you into that position. It will be very difficult to apply for unsecured cards or loans now that you have bankruptcy on your record so you can opt for a secured loan or credit card instead. These will help in building back up your credit. These types of financial accounts will come with higher interest rates but after you have improved your score you will be able to apply for an unsecured account once again.
Get a co-signer
Having someone co-sign on a credit card or loan will make the lender more likely to approve you if the co-signer has a good credit score. This will give you a second chance to prove your financial reliability and give your credit a boost. You also have the option of becoming an authorized user on their account so their credit score will help yours as long as you both are doing your part to keep it up. Make sure that the credit card reports the payments activity on your authorized user card to the credit bureau or else it won’t help build your score back up.
Not having or following a budget more than likely contributed to how you had to file for bankruptcy in the first place. Create a budget for yourself and stick to it and you will be surprised how disciplined you can be when you give yourself guidelines to follow. If you learn to cut corners on certain things you will find that you are able to have the same quality of life and more money in your pocket. Getting the generic brand of certain things or packing your lunch every now and then can really add up. If you have a hard time knowing where or how to start you can consider going to a credit counseling agency. They often provide free budgeting help.
Implement good habits
Bankruptcy may bring down your credit score but it also helps you to start fresh. Now is the perfect time to start implementing good financial habits. Set calendar reminders in your phone or turn on the alerts for when your payments are due so you make sure you are not late. Over time this will look amazing on your payment history. You can also start building up your savings account or emergency fund. This will give you a safety net so if you ever think you are going to fall short one month you have a backup plan. This can be easily done by adding a small amount each month and increasing the amount as you get a pay increase or bonus. Contributing to your retirement accounts is also a great idea as well, now that you are working toward bettering your financial future.
It can be hard climbing back up the ladder after bankruptcy, and it will take time. It is important to be patient and consistent in your efforts to getting and staying back on track. When you create and maintain good financial habits you are more likely to become more financially responsible and independent. Don’t let the past hold you back and continue to push onward toward your goals. Rebuilding after bankruptcy and repairing your credit is possible.