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Crucial steps toward rebuilding credit after bankruptcy

On Behalf of | Sep 25, 2020 | Bankruptcy

You pondered day and night before filing for bankruptcy. You were embarrassed and ashamed to even consider it. However, you overlooked a major point: Bankruptcy provides a fresh start. It helped you and provided you with the chance for a deep introspective look into your life.

Now it is post-bankruptcy. How do you rebuild your credit and get back on track? What do you do? Plenty of things to help improve your credit score and make an about-face regarding your financial life. Your credit score has taken a major hit, but that number had not been one to boast about, anyway. Now, it is time for reinvention.

Understand what happened

Understand from the start that credit will not be easy to get after you filed bankruptcy. But here are some crucial tips that can help you re-establish your credit:

  • Dig deep within yourself in understanding the cause of your bankruptcy. Self-evaluation is good and can assist you in making specific life changes to avoid a repeat performance.
  • Assemble a budget and adhere to it. By tracking your expenses for several months, you can see where your money goes.
  • Build an emergency fund. This will force you to spend less, while saving for the future. At a minimum, save six months’ worth of expenses, but, ideally, more.
  • Closely review your credit report. Make sure to correct any errors. Those changes just might boost your credit score. Remember, poor credit affects many aspects in your life. Your credit score often determines whether you get a reasonable mortgage rate or whether a prospective employer wants to hire you.
  • Obtain a secured credit card. It resembles a regular credit card and works like one. However, this card requires you to post a monetary deposit with a lender. With this card, your credit limit is equivalent to the amount you deposited in the account. After using it for a year or so, you may be able to obtain a regular credit card.

With patience as an ally along with some newly gained knowledge and experience, you are sure to turn around your financial life post-bankruptcy. You can do it.