5 Ways to Rebuild Your Credit After Bankruptcy
Although bankruptcy is sometimes the only way out if you are overwhelmed with too much debt, it has several undesirable consequences such as bad credit that stays on your credit report for at least 7 to 10 years. However, with a little work, you can rebuild your credit after bankruptcy.
Following are 5 ways to rebuild your credit after bankruptcy:
1. Get to Know Your Current Credit Status
Your journey to rebuilding and improving your credit starts when you know precisely where you stand with your credit and how far you have to go to make things right. First, obtain copies of your credit report from all major bureaus. Then review them closely and understand the information recorded in the reports and highlight any inaccuracies or negative records that are damaging your credit score.
2. Obtain A Secured Credit Card
After reviewing your credit report, the next important step is to get a secured credit card. In a secured credit card, your credit line is secured by the deposit you make into your savings account linked to that card. So the amount that you deposit in your savings account is also your credit limit. Generally, secured cards don’t have the best terms, but the upside is that no credit checks are run as long as you deposit required funds and pay the application fee.
3. Create Realistic Budgets
You will need to become extra cautious regarding your finances after a bankruptcy. Even if you have never created a budget in your life before, this is the time you will need to be serious about it. As your spending plan, your budget will help you in managing your cash flow effectively, and as a result, it will prevent you from getting into unwanted debts. Budgeting helps you prioritize and leaves room for any savings, debt repayment, and bill payment.
4. Pay All of Your Bills on Time
Make it your priority to pay all of your bills, including utility bills on time. A great way to do this is to set up automatic bill payments. Also don’t forget to pay your mortgage or rent on time because such payments may play an important role in your credit score and are often tracked. Paying your bills on time is one of the most powerful things that will ultimately help rebuild your credit.
5. Avoid Overdraft Fees
If you have huge amount of overdrafts, then it is a sign that you are in financial peril. Overdrafts just like all other cash advance type schemes, end up being costlier for you in the long run. To avoid those overdraft fees, you need to balance your checkbook against your monthly bank statement and keep careful records of everything you have bought, including debit card purchases that most people tend to forget about.
Bankruptcy should not tie you to a bad credit score for 7 to 10 years. You have to be willing and active if you want to rebuild your credit. The main thing to remember is that the process of rebuilding your credit takes commitment, patience, and time.
The Travis Law Firm provides professional legal representation for Chapter 7 & Chapter 13 bankruptcy services for residents of all cities in Riverside and San Bernardino Counties. We have offices in Riverside, San Bernardino, Victorville, Temecula, Cathedral City and Ontario for the convenience of our Inland Empire, High Desert, and Coachella Valley clients. For more information about our bankruptcy law services and other legal representation, call us today at 1-800-BANKRUPT or (951) 274-9501.