Jul 21, 2021 08:57 PM EDT
A Guide to Rebuilding Your Credit After Bankruptcy
Personal bankruptcy is a severe legal process that will impact your credit score. For the legal aspects, you can let Orlando bankruptcy lawyer Walter Benenati handle everything. However, for rebuilding the credit afterward, you have to take calculated financial decisions.
Most people think they can never rebuild credit after bankruptcy. When in fact you can grow it faster than you think. The bankruptcy lasts on your credit within 7 to ten years. You can, however, start the rebuilding process immediately.
Here are some of the tips to start improving your finances immediately after a bankruptcy:
- Practice Good Credit Habits
Good credit practices are the number one way to ensure your finances return to order. Make all your debt payments on time as the payment history impacts the credit score. Timely debt payments give your credit information positive scores to rebuild your credit. Like the debts, you must also handle the bills promptly. Whether it's the telephone, cable, or any other utility bill, you have to pay them in time.
The other good credit habit is to use credit cards and pay off your monthly payments. Paying off the balances helps build your credit like paying off other debts does.
- Check Your Credit Reports
Monitoring your credit reports is crucial when looking to rebuild your credit after a bankruptcy. This is the time to familiarize yourself with the report and its content. In the past, you could only access a free credit report once every year. However, following the coronavirus pandemic, you can access weekly reports until April 2022.
The reason for observing the credit report is to ensure all the entries are accurate. Take note of any errors like inaccurate public records that might mess your credit score. Also, understand the various aspects of the report that can improve it and work on them. Do not hesitate to dispute credit errors for correction.
When you follow up on the credit report you will ensure the bankruptcy is removed immediately after the waiting time elapses.
- Seek a Credit Product
After filing for bankruptcy you will find it hard to get loans from borrows. However, there are various ways you can convince them of your ability to repay. Receiving and servicing the loans in time will help rebuild your score.
One of the ways to get a credit product is through a secured loan or a credit builder loan. This kind of loan might require you to make a deposit against which you receive the loan. You might also have the money in your savings account but only access it after making some mandatory payments.
Getting a secured credit card based on your deposit is another ideal way to rebuild credit in the short term. You can also have someone with a good credit score co-sign your loan application.
- Become an Authorized Account User
Becoming an authorized account user is one of the easiest ways to build your credit after bankruptcy. It involves someone else, most probably a family or friend, adding you to their credit card account. Your credit card will gain from the healthy score and the on-time payments by the account holder. Also, you don't have to worry about your current financial status affecting that account; it won't.
Most people find it hard to believe they can rebuild their credit after a bankruptcy. For those who might want the rebuilding, they believe it takes years to accomplish. However, with the right strategy, you can get your credit ratings to start improving within a year. Use the above tips to help get you started on rebuilding your credit after bankruptcy.
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