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Rebuilding your credit after filing for bankruptcy

On Behalf of | Apr 7, 2022 | Bankruptcy | 0 comments

Filing for bankruptcy means that your finances are not in order, and you cannot meet your financial obligations. For this reason, your credit rating is probably already damaged even before you file for bankruptcy.

However, it is possible to rebuild your credit rating once your bankruptcy is over. It may take time to regain your former credit score, and the earlier you start working on rebuilding your credit rating, the better. Below are some helpful tips.

Remain current on your existing debts

If you have any loans or debts that remain after bankruptcy, it is advisable to keep up with the payments. Your debt repayment history matters when arriving at your credit score, and remaining current with your debts will work in your favor.

Create a new budget

Living within your means is key to rebuilding your credit rating, given that you will not have to borrow money to sustain your lifestyle. Avoid any unnecessary or unplanned expenses by coming up with a budget and sticking to it. Remember to set aside an emergency fund to cushion yourself against unexpected events beyond your control.

Make use of special credit options

You might consider applying for a secured credit card as you slowly ease into credit. A secured credit card is limited to the money in your account, so you will not be in danger of defaulting. Alternatively, you can apply for a loan with a co-signer who has a higher credit rating (although they will be on the hook if you default).

Be patient with your credit recovery journey

As mentioned, rebuilding your credit rating is not an instant process. It may take time to make noticeable progress. However, if you are consistent and determined, you can successfully bounce back from bankruptcy and attain financial freedom.