For many people, filing for bankruptcy can help them take control of their debt and stop it from accumulating further. However, the process does have an impact on credit score, which can make it harder to obtain loans and credit in the future.
Keep in mind that these changes are temporary, as you can immediately take steps to improve your credit after filing. Here is how you can work towards a bright financial future.
Keep track of your credit score
Monitoring your credit score each month serves two purposes. First, it shows you that your efforts are paying off every time you see an increase. Second, it helps you identify any possible discrepancies, which you must address immediately to keep your credit in good standing. There are free services that allow you to check your score without performing a hard inquiry, such as when taking out a loan.
Create an emergency savings fund
Many people end up in debt because they encounter an unexpected expense, such as a repair bill or medical cost. An emergency savings fund ensures you have cash on hand to deal with unexpected costs. Treat your savings just like any other bills by allotting a certain amount to the account each paycheck. Automating deposits is also beneficial, as it allows you to build up your savings automatically.
Apply for a secured credit card
Regardless of your financial standing, it’s important to use credit cards responsibly. Responsible use, such as paying off balances in full each month, can help build up your score. Because it is more challenging to get a conventional card post-bankruptcy, many people acquire secured cards. These cards have collateral behind them, usually a deposit of $500 or more. This deposit becomes your balance, which you can borrow against until you reach the limit.
Rebuilding your credit takes time, but it’s possible to get on solid financial ground once again. By being responsible and considerate with your money, you will rebuild your score.