Bankruptcy is a legal option for reclaiming your financial future. Many people assume that they won’t be able to rebuild their credit once they file for bankruptcy, but that’s not the case.
While a bankruptcy stays on a credit report for up to 10 years, it’s possible to regain your financial stability if you plan properly. Consider these tips to help you get started:
Make timely payments on all accounts
One of the best things you can do to rebuild your credit is to make your payments on time if the account reports to the credit bureaus. Payment history is one of the primary factors of the credit score. It may be beneficial to set up automatic payments or reminders so you don’t miss due dates.
Use a secured credit card
A secured credit card requires you to put down a cash deposit, which is held as collateral. The amount of collateral determines your credit limit. You can boost your credit considerably by making small purchases and then paying the card off fully each month. This shows a positive payment history.
Keep credit utilization low
You shouldn’t use all the credit you’re granted. Keeping your utilization low shows that you can be responsible with credit. Avoid the temptation to seek additional credit in order to keep utilization low because applying for cards rapidly can harm your credit.
It will take time to rebuild your credit, but taking it slowly may ensure you can do it effectively. Be sure that your bankruptcy is discharged before you start the process. Working with someone familiar with bankruptcy may make it less stressful as you work through the process.