After filing for bankruptcy, you might be worried about your ability to regain good credit. It is natural to want to open up new lines of credit, but in reality, the most important step in restoring your credit is to pay your existing debt obligations on time. This is why bankruptcy counseling programs must include information about budgeting, debt reduction, and other financial topics. Additionally, you can get guidance from non-profit credit counseling agencies like the National Foundation for Credit Counseling.
Being punctual in paying your bills
Paying your bills on-time is a key aspect of credit repair after bankruptcy. Your payment history makes up 35% of your FICO Score, so making payments on time is vital to your rebuilding process. It is also a smart idea to limit your monthly costs. By limiting your monthly spending, you can keep on top of your bills and end the cycle of debt.
You can start rebuilding your credit by paying off any outstanding loans. Once your debt is paid off, the next step is to build an emergency fund. It is important to save money for unexpected expenses.
Secured credit cards
A secured credit card is one of the best ways you can rebuild your credit after bankruptcy. The card requires a deposit equal or greater the credit limit. This deposit cannot be refunded unless you close the card or upgrade it. These cards are an excellent way to raise your credit score and establish a solid credit history.
This card is easy after bankruptcy, as the credit limit is only the amount of your security deposit. Unsecured credit cards on the other side will not require you to have a credit check and may be able to extend credit without your bankruptcy. These cards come with high fees and steep interest rates.
Using Peer to Peer loans
Lenders often be wary of people who declare bankruptcy. These people are likely to be in financial distress because their past loans have been repaid partially or completely. You can rebuild your credit with a few simple guidelines. First, be honest about your financial situation and prove that you have made significant improvements in your financial habits. Also, you should prove that your money has been saved.
It is important to ensure that your credit reports are current and clean before you begin the process of rebuilding credit. A free copy of your credit report can be obtained by the three major bureaus. Take steps to rectify any errors.
Negative information about your credit report is able to be corrected
While bankruptcy can cause damage to your credit history it is possible to rebuild it. You can immediately restore credit by signing up for a free credit score and credit report. Even if you believe you have bad credit, you can still start to rebuild your credit in just a few short months.
You can start by writing to credit agencies to dispute inaccurate information. Fair Credit Reporting Act states that credit reporting agencies are required to investigate disputes and rectify inaccuracies. Notes explaining your side of the story can be sent to credit bureaus. You will have the information for seven years. Therefore, it's crucial to act now.
Applying for a credit card renewal
A new credit card can be obtained to rebuild credit after bankruptcy. Credit card companies must report payment activity to credit bureaus. However, a low utilization rate will help you rebuild credit more quickly. It is best to pay off your credit card immediately and have zero balance.
If you want to rebuild your credit following bankruptcy, lenders will need to see that you are responsible with your money. Your credit score is largely determined by how well you pay your credit cards. While credit cards can be used to pay for things you can easily afford, you should not spend too much and end up paying high APRs.