Rebuilding Credit After Bankruptcy

If your credit has suffered during the current financial downturn, you are not alone. In 2010, over 1.5 million individuals filed for bankruptcy. Thankfully, a bankruptcy does not have to be the end of your financial life.

There are steps you can take to restore your good credit score. Be aware that this is a process that takes time and discipline. There are no easy shortcuts. However, the simple and straight forward tips below can get you back on the road to financial health:

  • Get copies of your credit report from all three agencies, and check them for errors. You can obtain free reports once a year from the official site annualcreditreport.com. Challenge any inaccuracies on your credit report, as these can pull down your credit rating.
  • Get current on any debt that was not discharged during your bankruptcy, such as student loans. Call the creditor to set up a payment plan that is within your means. It is also important to pay down any other debt you still have. The lower your debts to earnings ratio, the more credit worthy you are perceived.
  • Make sure that every payment you send for monthly bills is sent on time; consider setting up automated payments to ensure this. Not only does making timely payments help rebuild your credit, it saves you from paying late fees each month.
  • Apply for a secured credit card through your bank. You will have to make a deposit in an untouchable account equal to the limit on the card. Make charges on the card, and pay it off in full each month.
  • Once you have been making timely payments on a secured card for three or four months, it is time to attempt to get unsecured credit. Store credit cards are usually easiest to obtain.
  • Be careful not to have too many inquiries made on your credit. This can also hurt your credit score. If you are shopping for a loan, for instance, make sure all inquiries are within a short span of time.

After you receive you bankruptcy discharge you can immediately start rebuilding your credit. By following the tips above and making other good financial decisions, you will be on your way to improving your credit score as quickly as possible.

Source: 10 Steps to Repair, Rebuild, and Protect Your Credit

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