If you have been through bankruptcy, you might be tempted to avoid using credit entirely, but you need to re-establish credit. Rebuilding your credit after bankruptcy will take discipline and work on your part, but it is possible! Remember that discharging debt and high balances through bankruptcy makes it much easier to reestablished an improved credit score.
Use a budget
This is a simple solution that is often overlooked. You may already have a general idea of your budget. But, until you map it out on paper/spreadsheet, you won’t realize how much you are forgetting. So, make a list of the most essential expenses. Adjust your spending with a new focus only on the essentials. Remember, little things can add up quickly, so a budget helps you to cut out unnecessary expenses.
Pay off balances on time
This is crucial to repairing your credit. After a bankruptcy, the credit-scoring bureaus will keep an eye on you, even as your score begins to climb. So, if you make a payment that is even one day late, the bureaus will assume you are back to your old ways. You MUST pay your bills immediately every single month. If you keep your balances low, you will be able to pay them off in full each month.
Check your credit report
You will want to do this with each of the three major credit bureaus (Equifax, Experian, and TransUnion). This is an important step to ensuring that your credit reports are accurate. The three major credit bureaus provide you with a free credit report every 12 months, if you request one. You can click here to request one or call 1-877-322-8228. If you come across any inaccuracies or incomplete information, you will need to notify each of the credit bureaus. Fixing these mistakes can lead to an improved credit score.
Get a secured credit card
You may be hesitant to open new lines of credit after filing for bankruptcy, but you will need to show that you are able to build and maintain good credit. A secured credit card works similarly a debit card in that you pay the bank a security deposit prior to using it, but all the payments made will be reported as credit. If you get a card that you want to continue using in the future, you can eventually ask to have it switched to an unsecured card. When you are ready to make the switch, be sure to avoid any cards with high “start-up” fees to keep from going back into debt.
Use a gas or retail credit card responsibly
These cards can give you the opportunity to report good credit at the places that you will normally be spending money. Make sure that these transactions are reported to the three-main credit-scoring bureaus and make sure that you are spending responsibly. Only spend what you can pay off each month.
Whether you are trying to rebuild your credit after bankruptcy or just looking to make better financial habits, using the five tips we shared with you can help to rebuild your credit score. If you have more questions about what to do about your credit score after bankruptcy, call our office to schedule an appointment today.