High amounts of debt and a good quality of life usually do not go hand-in-hand. If you are swimming in a sea of bills that you simply cannot pay, filing for bankruptcy protection may be the right strategy. Still, you may worry about how a bankruptcy filing may affect your creditworthiness.
The major credit bureaus regularly advise consumers about the negative influence bankruptcy has on credit scores. Put simply, your credit rating may drop significantly after you declare bankruptcy. Luckily, though, your credit score does not have to stay in the basement. Here are five steps to rebuild credit after a bankruptcy filing:
1. Be patient
Because repairing credit takes time, you must not expect credit improvements to happen overnight. That is, you must not lose patience. If you remain focused, proactive and diligent, you are apt to see an eventual upswing in your credit score.
2. Draft a reasonable budget
Bankruptcy often offers the sort of second chance that everyone deserves. You do not, however, want to wind up back where you started. Accordingly, draft a reasonable budget, and stick to it.
3. Make payments on time
After bankruptcy, you likely must continue to make payments on some outstanding accounts. You also probably have monthly obligations, such as your phone and utility bill. Be sure that you always make these payments on time.
4. Request a secured credit card
With a secured credit card, you pay a deposit to the issuing entity. Then, you use the card the same way as any other credit card, except you are spending money you have already paid to the bank.
5. Regularly review your credit report
Finally, you should regularly request and review your credit report. If you notice any errors during your review, dispute them as soon as possible.
While bankruptcy can take a toll on anyone’s credit rating, it is often a successful way to manage debt effectively. After your bankruptcy concludes, though, you want to focus on rebuilding your credit. Fortunately, by taking a few steps, you can likely get it back on track.