How to Rebuild Your Credit Score After Bankruptcy
Here are some tips for rebuilding your credit after you file for bankruptcy.
If you’ve made the decision to file for bankruptcy, a legitimate concern you might have is the effects it will have on your credit score. The truth is that by the time you reach the decision to file for bankruptcy, your credit score has likely taken a significant hit. It’s likely much lower than you would like it to be, and you might be wondering what your options for recovery are. It is important to remember that immediately after filing bankruptcy you can begin rebuilding your credit. No matter what led to your decision to file for bankruptcy, there are several things you can do to improve your credit score and help pave the way for a better financial future. Here’s what you need to know.
1. Create a budget.
After you file for bankruptcy, make sure you avoid falling into the same debt traps you were in before you filed. Take time to determine what your expenses are and how you can best manage those. Consider utilizing a physical planner or even a budget application on your phone or tablet. While you might not want to take the time to track your income and expenses, it’s very important that you do so. Creating a budget can also help you start focusing on building up a savings account if that’s something you’re also interested in.
2. Check your credit scores.
Make sure you track your credit scores and your credit report regularly. Go to annualcreditreport.com and pull your three credit reports (Experian, Equifax and TransUnion). Confirm all information is accurate on each of the reports. Even credit reports aren’t always flawless, so make sure you’re monitoring your credit for anything strange or out of the ordinary. If you notice something on your report you didn’t authorize, such as a new line of credit, reach out as soon as possible to have your score corrected.
3. Consider a store credit card.
Many stores offer retail credit cards that enable you to carry a small balance. This can be an effective way to start rebuilding your credit score. Consider applying for an in-store credit card at a place you frequently shop, such as a grocery store or home goods shop. Make sure you pay attention to your charges and pay them off promptly. Remember: the idea is to start rebuilding your credit, not to get sucked back into a cycle of debt.
4. Create an emergency fund.
Whether or not you’ve ever actively focused on saving money before, it’s important that you start. Saving money is a valuable way to begin focusing on your future. Consider setting aside a set amount of money each week or each month into an emergency fund. You’ll be able to use this money when you have important, but unexpected expenses. This can include things such as new tires on your vehicle or unexpected dental bills.
No matter what led you to file for bankruptcy, you are not alone. Nearly a million people file for bankruptcy each year in this country. If you are considering bankruptcy and you are unsure whether it’s the right choice for you, reach out to an attorney today. Call to schedule a consultation so you can discuss whether bankruptcy is the best choice for your financial future.