Rebuilding your credit after hitting bankruptcy can feel like a humungous task. But, if you play your cards right, have a good plan, and are determined, then you can do it without much issue. One of the major hurdles people often feel is being mentally kicked down.
The first thing you should pay attention to is to get your spirits high and prepare yourself mentally for this seemingly daunting task.
Getting help from your family or friends can help you give the much-needed boost. The detailed bankruptcy guide on 24Cash talks about how to bounce back and build your credit after bankruptcy – from understanding to learning to getting help.
Let’s talk about the important steps you need to take to get your finances in order.
Make Sure Your Credit Report Actually Reflects Bankruptcy
For some people, it might seem taboo or uncomfortable to reflect their bankruptcy status on their credit score, but in fact, it is much better than having an outstanding balance.
It might be very helpful to send your bankruptcy discharge copy to all the agencies in case they report any of the discharged debts as active. Your credit report should show a $0 balance for any discharged accounts through bankruptcy.
Have a Stable Employment
Having a stable job can ensure lenders about your financial security and, in turn, improve your credit score. Taking up permanent employment can be a big step towards financial and credit score rebuild.
Avoid job hopping in general, but especially after bankruptcy, you want your lenders to trust your discipline. Constant job changes might not go down very well with your lenders as it shows instability.
Grow Your Savings
It is a big step in the right direction to start putting aside more money in your savings. Not only will this lead to financial stability, but it also shows positive signs of financial management to your lenders.
You can start by putting aside a percentage of your monthly earnings into a savings account. The consistency of this activity is more important than the enormity of the amount.
Maintain Regularity of Your Non-Bankruptcy Accounts
Contrary to popular belief, not all your accounts will be included in your bankruptcy. You should regularly pay all of your active accounts, which are not discharged by bankruptcy. Student loans are infamous for not being discharged under bankruptcy.
Moreover, accounts that aren’t on your credit score should not be ignored as they still can be reported if you fall behind.
Be Selective With Your Credit Applications
This might be an obvious strategy, but unfortunately, not many follow it. After bankruptcy, you may want to limit the number of credit applications you apply for, as there is a high chance of not being successful at any of them, given your credit history.
Try to apply for one product at a time, as further unsuccessful credit applications might hurt your credit score even more. Ideally, you should try to repair your credit score before you apply for any new applications.
Keep Your Overall Balance Low
The key to a good credit score is to keep the balances low. Your balance reflects how much credit you charge on your card. It is always best to keep your credit to 10-30% of your credit limit and especially after a bankruptcy.
Bankruptcy is not the end of the world, while it may seem like it. It’s just another hurdle that you need to cross. Pull your pants up and get to work, and you will be fine.