Tips for rebuilding your credit score after bankruptcy
Dealing with overwhelming debt can be extremely stressful. In fact, some people try so hard to claw their way out of the hole and do so for so long that they end up developing deeply set anxiety and depression that impacts nearly every aspect of their lives.
If you’re in this situation, then you can easily find yourself worried about the future, feeling like there’s no light at the end of the tunnel.
But if you’ve found yourself reading our blog, then you’re probably wondering if bankruptcy is the answer you’ve been looking for. It very well may be. If you can successfully navigate the process, then you might be able to obtain the debt relief that you need to allow you to secure a fresh financial start.
That said, if you’re like most people, then you probably have a lot of questions about the process and what it can and can’t do for you. One worry that most people have is how bankruptcy will affect their ability to secure credit later.
Can you rebuild your credit after bankruptcy?
Yes. While it’s true that your credit score will take a hit after filing for bankruptcy, and that your bankruptcy will stay on your credit report for several years, there are steps that you can take to start rebuilding your credit. This includes each of the following:
- Using a secured credit card: Although credit card companies might be hesitant to extend you the credit that you want, you might be able to alleviate their concerns by utilizing a secured line of credit. Here, you put up collateral to back the line of credit. In most instances, this means putting money in an account so that if you miss credit card payments, then the credit card company can turn to that money that’s already been deposited to satisfy the debt.
- Use a co-signer: If you’re struggling to secure credit or you need a larger loan for something like a house or a car, then you might want to see if you can use a co-signer. A lot of lenders will feel more comfortable extending credit to you if you have someone borrowing with you who has a strong track record of repaying their debts.
- Make payments on time: Rebuilding your credit is going to take time. Therefore, you’ll want to make sure that you’re focusing on making on time payments on your debts over an extended period of time.
- Create a budget: A good way to keep your debt in check is to create a budget and stick to it. Make sure you’re realistic with your income and your debt so that you’re not putting yourself behind the 8-ball from the start.
- Check your credit report: Make sure that debts that were discharged during your bankruptcy are actually taken off of your credit report so that they don’t negatively impact your credit score.
- Avoid job hopping: If you change jobs frequently, then it can look like you don’t have financial stability. Therefore, try to find a job that you like and stick with it for a while to show creditors that you have steady income that can help you repay your debts.