Building your credit after declaring bankruptcy is no easy feat, but it can be done with a strategic plan. If you’re looking to rebuild your credit following bankruptcy, here are 6 steps you should consider taking:
Start With A Secured Credit Card
The best way to begin rebuilding your credit is to get a secured credit card. Unlike unsecured cards, you’ll have to make an upfront deposit, but if you use the card responsibly and make all payments on time, you can build a good foundation of credit.
Pay All Bills On Time
Now that you have a card, the key is to pay all of your bills on time and in full. Every payment made on time shows potential creditors that you’re taking your financial obligations seriously and building trust in their eyes.
Keep Balances Low
In addition to paying all of your bills on time, it’s important to keep your balances low. Creditors prefer applicants with lower amounts of debt since this indicates responsible financial habits. Higher amounts of debt can actually damage one’s score even further after declaring bankruptcy.
Utilize Other Lines Of Credit Responsibly
Secured cards aren’t the only option available when trying to rebuild one’s credit after bankruptcy. Other forms of secured credit such as loans or retail cards can also be utilized if handled correctly. Keeping spending and loan amounts reasonable will increase the chances of improving one’s score significantly faster.
Monitor Your Progress
Even if it seems like progress isn’t being made quickly enough, it is always helpful to check-in periodically and assess the impact bankruptcy has had on your score over time – patience is key here! That being said, it may be useful to set specific goals for yourself in terms of rebuilding credit so that tangible results are visible with each new update from reporting bureaus such as Experion or Equifax.
Sign Up For Credit Reports
Once goals have been set, regularly monitor them through annual access to free credit reports which help gauge how much progress is being made by displaying changes in debt levels and current accounts opened since filing for bankruptcy relief previously. This can allow for corrective measures to be taken early if any unfavorable activity appears or incorrect information surfaces about one’s financial history at any point down the line.
Building your credit after declaring bankruptcy may not seem like an easy task, but with discipline, patience, and regularly monitoring progress – anything is possible!
