Many people believe that credit repair is impossible after bankruptcy. Obviously, they are wrong. Reestablishing credit after bankruptcy is POSSIBLE. However, the process can be a little difficult because you need to be disciplined and sensible enough regarding your finances. The process can be understandably overwhelming as you need to take crucial steps to mend your credit rating, your emotional well-being, and your financial life as a whole. Nevertheless, when done successfully, the results can be very rewarding.
Here are simple tips that can help you rebuild your credit post-bankruptcy:
Life after bankruptcy is definitely possible, but it doesn’t happen overnight. With bankruptcy, you can expect your once excellent credit score to drop to poor. Going back to 700s will take a lot of time, so patience is a must. You need to stick to the rules to eventually increase your score.
Don’t Cancel Your Old Credit Cards
As much as possible, don’t close your old credit card accounts, especially those that still have balances. Let the creditors decide whether they will cancel your accounts or not. Remember that payment history is one of the most important aspects considered in your credit score. If you keep your old cards and use them to rebuild your credit, you need to pay them on time. This is an effective way to finally get out of bankruptcy.
Don’t Apply for a New Card Without Carefully Considering the Cons
You may probably be lured into some of the attractive rewards that exist in cards today. Don’t fall to the same pattern where you may be in debt once again. Instead, find the most suitable card for your situation and apply for it. Make sure that you meet the requirements. Don’t apply for a new card simply because you want to purchase an expensive item. Such attitude has led several people to debt for many years now.
Get a Secured Card
A secured card not only lets you rebuild credit history; it also helps you avoid debt. Since your credit limit is based on your deposit, you cannot go beyond the amount. If in case you do not have enough funds to pay for your balances, you will not get into debt. The deposit that you have put into your account will serve as a security bond to your creditor. However, you should not resort to nonpayment as this will only hurt your score.
Have a Budget
In order for you to avoid any problems with your credit card bills, you should have a budget plan. It should be realistic enough based on your income. The budget plan will tell you how much you can spend for a month or within a given period. Stay loyal to your financial program so that you won’t run out of money. In addition, your budget should include your card bills. Since your main goal is to reestablish credit after bankruptcy, you should never miss a repayment. Making the minimum payment is an option, but is not a good choice if you want to raise your score.
The good news is that once your bankruptcy is discharged legally, you should be able to see your score skyrocket provided that you have made timely payments and that you have no delinquent accounts.