Filing bankruptcy is a necessary step for some people to regain financial footing. However, many people are afraid of the poor credit scores they may be left with once their bankruptcy process is complete. Poor credit scores can make it difficult to obtain housing or loans, but those with poor credit scores do have options. If you are going through bankruptcy, there are steps you can take to rebuild your credit score after completing the bankruptcy process.
Correct any errors on your credit report
One of the first things you can do is obtain a free copy of your credit report from the three credit bureaus. Most reports contain errors, so as you review your reports, pay attention to any errors and ensure they are corrected.
Make payments on time
A big part of your credit score is determined by timely payments, so it is important to make all your payments on time. Timely payments to debts that were reaffirmed in your bankruptcy can help rebuild your credit score. However, even if you do not have debt, timely payments on regular bills can help prevent any negative effects on your credit score. For some people, setting up automatic payments can help prevent accidental late payments.
Start with a secured credit card
A secured credit card is one that requires you to deposit with the lender an amount of money usually equal to the credit limit. If you do not make payments toward your debt, the lender can keep a portion of your deposit. Because these cards are typically easy to obtain, using a secured credit card can be a good way to begin building credit.
As you begin to use credit again, it is important to only take on small, manageable amounts of debt. A small, monthly recurring expense, like a T.V. streaming service, may be a good item to be charged to this card. Then, when you receive the bill, pay the balance in full and on time each month.
Upgrade to an unsecured credit card
After several months of timely payments, you might consider trying to obtain an unsecured credit card. A department store credit card may be the easiest credit card to obtain, but a regular bank credit card may be a more versatile option.
However, it is important to understanding how you became bankrupt before, and do your best to prevent it from happening again. A written budget, automatic payments and minimal debt can be helpful as you go forward. You may also consider utilizing a free credit score monitoring service to help you watch your credit score evolve.