Going through a bankruptcy can be a stressful experience. A bankruptcy typically stays on your credit report for 10 years. Once your bankruptcy goes through, it’s important to take steps to start rebuilding your credit score. Here are the smartest ways you can begin to repair your credit after a bankruptcy filing.
Talk to a Credit Counselor
Before you make any decisions in your post-bankruptcy financial life, consider talking to a credit counselor. Many credit counselors offer free consultations, which can give you solid advice about your new plan for your personal finances once your bankruptcy is approved. Credit counselors can give you advice about how to avoid getting into the debt trap once you’ve gotten relief through your bankruptcy.
Make a Budget
Next, it’s vital to make a new budget plan to help you stay on track with your spending and debt. Consider cutting out any unnecessary expenses temporarily to help yourself get back on your feet. Shop around for discounts on your monthly expenses, such as car insurance and utilities, to get a lower price. Lowering your expenses can help you keep more of your monthly pay and make it easier for you to pay your future bills.
Invest in Retirement
People who live paycheck to paycheck may not have thought about their financial situation for retirement. After your bankruptcy has gone through, you should concentrate on building a strong retirement portfolio to prepare for your senior years. Start small with your investment, and over time, you should be able to build a strong retirement fund that could help you support your lifestyle in the future.
Review Your Credit Report
Another step that is essential after a bankruptcy filing is to review your credit report regularly. Every consumer is entitled to one free copy of their credit report each year from all three credit reporting agencies. For someone with fragile credit, it may be worthwhile to subscribe to a credit monitoring service so you can see the changes to your credit file in the months and years after your bankruptcy. Review your file for any inconsistencies and take action to correct any errors.
Get a Loan
The next thing on your to-do list for credit repair is to get a loan. Even with poor credit, it’s still possible to be approved for a loan, especially for a vehicle. A car loan helps build your credit score and shows lenders that you’re committed to paying your debts post-bankruptcy. There are many different types of loans for people in this situation, so if you need a new car, you don’t have to worry about being shut out of the vehicle-buying process. You can shop around for the lowest interest rate by researching loans online.
Apply for a Secured Credit Card
Another way you can rebuild your credit is by getting a new credit card. Individuals with bad credit should start with a secured credit card to help slowly repair their creditworthiness. Secured cards usually have a small limit, which you pay upfront to reduce the chances of the lender’s risk. Over time, your credit should slowly begin to get better as you make consistent purchases on your new credit card.
Pay Your Bills
The last important tip for credit building is to pay all of your bills on time. Think of your new financial situation as a fresh start. Don’t tarnish your credit after a bankruptcy by missing payments or paying late. Paying everything early or on time will show lenders that you’re committed to new financial habits after going through a bankruptcy.
You can survive a bankruptcy filing if you follow these steps and commit to building your credit the right way. Over time, your bankruptcy will be a distant memory and your credit will eventually rise up to where you want it to be.