After bankruptcy, your credit can take a big dig. In simple words, filing bankruptcy comes with a negative credit score that can impact your financial loan needs.
Is it possible to rebuild credit after bankruptcy?
Yes, of course, you can rebuild the credit. With every positive mark on your credit report, the credit score begins to rise. And you will be eligible for new credits. Here are some steps to build credit after bankruptcy.
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Steps to Rebuilding Credit After Bankruptcy
Here are some steps to rebuild your credit after bankruptcy:
- Keep up payments with non-bankruptcy accounts
Once you file the bankruptcy, check which accounts are open or working for you. It is true that bankruptcy cancels most of your debt, but there must be some remaining debt, like alimony payments, student loans, mortgage loans, etc.
So, try to repair your credit after bankruptcy by paying down the balance of these loans or payments. It helps decrease your debt-to-income ratio and boosts your credit. If you want to speed up things, try to pay more than the minimum monthly payments. Making payments on time can help build good credit.
- Build Credit with a Secured or Retail Card
When you are charged with bankruptcy, the banks do not want to deal with you and are not interested in offering you any loan or credit card. It is because they think you are too risky to pay off debt or for making payments.
But, the best way to mitigate the risk is to give them collateral. Something they can hold on to in case you get bankrupt again. Banks are more likely to give you the secured credit cards as they are backed by
Further, paying back retail credit cards is also a great way to rebuild credit after bankruptcy. So, try any of these ways to build credit after getting bankrupted.
- Become an Authorized Account User
You should try to become an authorized account user to rebuild your credit or credit card after bankruptcy. For this, ask a close friend or relative to add you to their credit card account. In this case, you do not need to pay any money charged to the account.
But, if the account is maintained properly, then you can get positive marks on your credit report. On the other hand, if your friend or relative racks up unpaid bills, then your credit score can become negative.
So, for this, try to choose someone trustworthy and one with good financial decisions.
Other Tips to Help Build Credit After Bankruptcy
Here are the other tips to keep in mind to rebuild your credit after bankruptcy:
Make all debt payments on time: Your payment history is the only factor that determines your credit score. So, it is always better to make payment on time. This shows that you are a reliable borrower to creditors.
Avoid frequent job changes: The state of employment has no direct connection to your credit score, but lenders do not trust borrowers who drift jobs frequently.
Life after Bankruptcy
Life after bankruptcy can become a little difficult, but you can rebuild your credit with your smart choices. Further, you may need legal help to deal with bankruptcy charges and speak to the credit counselor.
Keep in mind that bankruptcy is a shot at a fresh start, and have faith in you to build new credit. You can also contact us to dael with charges of bankruptcy on you. We are a team of skilled and legal professional who can help you with tips to rebuild your credit after bankruptcy.