While bankruptcy can be a positive move to starting over with your finances, it’s no secret that your credit score will take a hit. However, with responsible spending and a few other strategies, it is possible to rebuild your credit score. Here are our top tips and tricks to raise your credit score following a bankruptcy.
Monitor Your Credit Score Closely
After your bankruptcy ends, the first thing you should do is review your credit score thoroughly. This will give you the best insight of where you are and where you need to go in terms of raising your credit score. You should make sure that your report does not list any late or active debts if they were meant to be discharged in your bankruptcy, as this will be detrimental to your credit score. If there are any errors or discrepancies, dispute them immediately.
Consider A Secured Credit Card
Getting approved for a post-bankruptcy credit card can be difficult, but having an open credit line is one of the best ways to rebuild your credit after bankruptcy. This is where secured credit cards come in. Secured credit cards are easier to be approved for, since you make an initial deposit that the creditor can use if you stop making payments. Many banks and credit unions offer secured credit cards, so you can start building credit after bankruptcy.
Look Into A Credit-Building Loan
While the idea of loans may be nerve-racking, there are lower-risk loan options that you can choose to repair your credit after bankruptcy. Credit-building loans work in reverse, meaning the borrower will make payments to the creditor where it then goes into a savings account. Once the account reaches the agreed upon loan amount, the borrower receives the loan. Even though this works the same as you having your own savings account, making the installments helps to raise your credit score.
Become An Authorized User
If you know someone that is willing to add you as an authorized user on their credit card account, this is another way to fix your credit score after bankruptcy. When you piggyback on someone else’s account who makes on-time payments and uses their credit line responsibly, it will reflect positively on your own credit score. However, if the person falls behind on their payments, it will affect you negatively. So, make sure it is someone you trust that earns a steady income.
Save For Emergencies
While this is an indirect way to raise your credit score, saving for emergencies should become a new priority. If you have no savings and face unexpected expenses, it may cause you to start taking on new debt or falling behind on bills, which can bring you right back to square one. Instead, start setting aside some money from each payment, so you have some money to fall back on if you do face a financial emergency.
Contact Barbara B. Braziel
If the damage to your credit score is what is holding you back from finding financial relief through bankruptcy, it’s important to understand that you can rebuild it. When you’re ready to file for Chapter 7 or Chapter 13 bankruptcy, Barbara B. Braziel is here to guide you through the process. Contact our team today to schedule your free consultation.