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6 steps to rebuilding your credit after bankruptcy

On Behalf of | Feb 1, 2024 | Bankruptcy

Rebuilding credit after bankruptcy is a journey. It requires patience, discipline and strategic planning. While this move can stay on your credit report for up to 10 years, you may immediately start working to improve your credit score.

The following steps will go a long way toward helping you reclaim financial freedom.

Step 1. Review your credit report

Request a copy of your credit report from one of the major credit bureaus. Review it for any inaccuracies or old debts that should no longer be present due to the bankruptcy. Dispute any errors with the credit bureau to ensure the report is accurate.

Step 2. Develop a budget

Creating a budget is imperative for anyone who wants to manage finances. Write down your income and expenses for a better handle on your fiscal picture. This should assist you in the quest to avoid overspending and ensure you always have enough money in the bank to cover bills.

Step 3. Get a secured credit card

A secured credit card is a fantastic tool for rebuilding credit. With one, you make a deposit that serves as collateral and sets the credit limit. Use this card for small purchases and pay off the balance in full each month. Over time, this demonstrates fiscal responsibility and helps build back your credit score.

Step 4. Consider a credit-builder loan

A credit-builder loan is another option worth contemplating. This loan type involves borrowing small amounts of money, which the lender holds in an account while you make payments. The resulting positive payment history should strengthen your credit.

Step 5. Pay all bills on time

Handling bills in a timely fashion will work to your advantage. Set reminders or enroll in automatic payment plans to ensure you never miss a due date. Consistent, on-time payments show creditors that you can manage debts responsibly.

Step 6. Keep an eye on your credit score

Regularly checking your credit score allows you to track your progress and identify areas for improvement. Many credit card companies and financial websites offer free credit score monitoring services that you may find worth exploring.

Regaining credit in the wake of bankruptcy takes time and effort. Such an accomplishment is more easily achievable with the right strategies.