Some people needlessly delay declaring bankruptcy because of their worry about what it will do to their credit. In fact, one of the major concerns after declaring bankruptcy is how to rebuild credit. You may feel overwhelmed and powerless when you contemplate your future, but there are ways to establish good credit after resolving your bankruptcy. Here are some of the ways to rehabilitate your credit after declaring Chapter 7 bankruptcy.
Get Help Establishing a Budget
Seek out resources from non-profit community organizations that offer education on budgeting. Make a budget for your household, and stick to it. If you have some extra funds left over each paycheck, squirrel it away into an emergency fund so that every unexpected expenditure doesn’t become a crisis. It may seem impossible to accumulate a nest egg, but you will be surprised at how quickly small amounts of money add up when you consistently save.
Check Your Score
It’s true that your bankruptcy shows on your credit report for 10 years, but you don’t have to wait that long to take some gradual steps towards establishing better credit. Monitor your credit score and get a credit report annually. Tackle any inaccurate information on your credit report so you can make it the best it can be.
Raise Your Score
Now that you’ve checked your credit report and have saved some money in a bank account, you’re ready to build a better credit history. There are a variety of ways to accomplish this, including a secured loan or credit card. With a secured loan, you are borrowing money from funds you already have in the bank. This may seem counterintuitive, but the bank isn’t risking losing money while they give you the chance to prove your ability to make payments on time. You deposit money to attain a secured credit card as well as pay an annual fee, but it gives you the convenience of using a card to pay for purchases while repairing your credit.
Keep Your Debt Level Low
Moving forward, try to keep any debt you accumulate as small as possible, and ideally focused on rebuilding your credit. Pay those credit-building loans on time, and watch your credit history build into something positive.