Bankruptcy is a significant financial event that can dramatically affect your credit. However, it does not mean an end to your financial life. Filing for bankruptcy is a step toward resolving overwhelming debt, and while it may lower your credit score initially, you can rebuild your credit over time.
Here are some strategies for rebuilding your credit after filing for personal bankruptcy.
Understand your credit report
After bankruptcy, you should request copies of your credit report from all three major credit bureaus. Review your reports thoroughly to ensure that all debts discharged through bankruptcy show a zero balance. Incorrect information can further harm your credit, so report any discrepancies to the credit bureaus immediately.
Create a budget
A realistic and sustainable budget can help you manage your money, pay your bills on time and even save a little each month. Sticking to a budget can also prevent you from falling back into debt.
Pay all bills on time
Your payment history significantly influences your credit score. Consistently paying your bills on time can help rebuild your credit. This includes not just credit card and loan payments, but also rent, utilities and even cell phone bills.
Build new credit cautiously
You will need to start building new credit after the dust settles. You might start with a secured credit card, which requires a cash deposit that serves as your credit limit. Use this card responsibly, keep your balance low and pay your bill on time each month to build a positive credit history.
Check your progress
Regularly review your credit reports to track your progress and ensure the accuracy of the information. You can request a free copy of your credit report from each of the three major credit bureaus once a year.
Rebuilding your credit after bankruptcy can be a lengthy process, but with patience and careful financial management, you can regain control of your finances and improve your credit score.