Rebuilding Your Credit after Bankruptcy
While it’s true that life after bankruptcy won’t be a walk in the park, it is not nearly as difficult as most people imagine.
Myths about life after bankruptcy are everywhere: people say that you won’t be able to get a mortgage for 10 years, that you won’t be able to get car loans at low interest rates, that you won’t be able to get credit cards, etc. But these myths are simply not true.
With some time and effort, you can rebuild your credit after bankruptcy. An article from Daily Finance gives several good suggestions, listed below.
Create a realistic budget and stick to it: A budget is the single best thing to help prevent you from racking up unnecessary debt. Your budget should prioritize the necessities-food, housing, transportation, medicine, etc.-and allow you to contribute to an emergency fund.
Pay your bills on time: Your credit score is affected by whether or not you pay your bills on time. Repaying your bills on time is one of the most effective things you can do to rebuild your credit. To help yourself stay on track, you can try setting up automatic bill payments. If you can’t pay everything on the day it’s due, make sure to pay the necessities first.
Get the right credit card: To help rebuild your credit score, you can get a secured credit card. A secured credit card works by having you deposit a certain amount of money into a bank account. The amount you put in becomes your credit limit. Borrowing small amounts and repaying them on time will help your credit score. However, you should know that not everyone qualifies for a secured credit card. Also, you should avoid cards that charge high fees or don’t report your payment history to credit bureaus (this won’t help your credit rating).
If you’re worried about life after bankruptcy, there’s good news: credit bureaus put greater weight on recent credit activity. This means that, although your bankruptcy may stay on your credit report for up to 10 years, it won’t take that long to rebuild your credit.