Ways to Rebuild Credit After Bankruptcy
One of the most common myths about claiming bankruptcy is that it will ruin your credit forever. That is just absolutely not true, and in fact more people have better credit scores 1 year after filing for bankruptcy protection than they ever had before. The truth is, bankruptcy will stay on your credit report for a certain number of years, but it does not stop you from rebuilding your credit once your case is discharged (or completed). So what are some of the ways you rebuild your credit after claiming bankruptcy? Here are some suggestions:
- Secured Credit Cards: Secured credit cards are a great way to rebuild credit because you essentially set your own credit limit by depositing a certain amount onto the card and only spending what money is available. The opening deposit on secured credit cards range from $300-$1000 dollars depending on the financial institution you choose. Using a secured credit card reports positively on your credit and in some cases after several months of good standing the bank may even extend your credit limit without another deposit, or convert your account to a regular credit card.
- Stay Current on Everything: Bankruptcy help can take care of most unsecured debt, but most Americans have several secured debts that require monthly payments that bankruptcy does not wipe away. Some of the most common secured debts include mortgage, car note, utilities, and student loans. It may seem like common sense, but it is imperative that you make on time payments on these items each month to start generating positive credit again. Bankruptcy attorneys will tell you this more than you want to hear, but it is one of the keys to making sure you don’t become vulnerable to claiming bankruptcy again.
- Store and Gas Credit Cards: Obtaining credit cards from grocery stores and gas stations that you frequent is also a good way to rebuild credit. In most households today groceries and gas are necessities, so you know about how much money you typically spend. The key is to use the store or gas card at the register, but immediately pay it back once you get home so you are not misled by how much you have left in your checking account. By using that method, your credit card companies will report positively to the credit bureau while you are merely spending the same money you would have in months before.
Ultimately, if claiming bankruptcy was a decision you truly needed in the first place then your credit was probably not at the top of its game so the only place you can go is up! Be sure to discuss how to rebuild your credit with bankruptcy attorneys throughout the process. By making positive financial decisions, like the ones listed above, after your bankruptcy discharge you can ensure that your once sore credit will soon be on the rise. Just remember the post bankruptcy basics: make payments on time every month and don’t spend more money than you are making.