Bankruptcy can take a serious toll on your credit scores. Not only that, but filing for bankruptcy makes it hard to get approved for new credit in the future. Therefore, bankruptcy seems devastating. However, filing for bankruptcy doesn’t mean that you will never be able to get any credit. It is possible to repair your credit after bankruptcy, and many people have actually been able to improve their credit scores and secure loans after a bankruptcy discharge. Below we explained a few ways to rebuild your credit after bankruptcy.
Rebuilding Your Credit after Bankruptcy
· Make Timely Payments
If you want to rebuild your credit score, make sure to make timely payments. Many factors make up the credit score, and they are weighted differently. On-time payment is one of the important factors, and it accounts for up to 35 percent of the total score. This is why it is important to make payments on time. It is worth noting that only the payments that are reported to the credit agencies will have an impact on your credit score. These include credit-based accounts like personal loans, auto loans, mortgages, and credit cards. Paying for cell phone, electricity, rent, and other bills won’t affect your credit score.
· Get a Secured Credit Card
You may be able to get a secured credit card even after filing for bankruptcy. With this type of card, you are required to make a deposit equal to the credit limit that you are allowed on the card. For example, a $400 credit limit requires a $400. You will have to manage the new credit card properly and keep in mind that the main reason you got this card is to rebuild credit. If you over-utilize your account or make late payments, your new card would hurt your credit rather than repairing it.
· Monitor Your Credit Report
Credit reports are not perfect. There can be errors in them, which can affect your credit scores. Therefore, it is important to check your credit reports to ensure that they accurately reflect the bankruptcy. The accounts included in the bankruptcy should show zero balance. If you find any errors, dispute them.
· Try a Credit-Builder Loan
Credit-builder loans are designed to help consumers build credit. They work differently than other kinds of loans. In this type of loan, you won’t get the money upfront. Instead, the lender will put the cash in a savings account. You would get the money once you have made all the payments. If you make payments on time, your credit score will improve.
· Consider a Secured Loan
You can consider getting a secured loan to rebuild credit. These loans are backed by collateral like a vehicle which the lender can claim and sell if you aren’t able to repay the loan. These loans can be a good option for you if you can afford to make timely payments. Before applying, make sure to check the monthly payments, fees, and interest rate to see if you can afford the loan
Don’t lose hope if you have filed for bankruptcy. You can still rebuild your credit by trying the methods discussed above. In case you have any questions, feel free to write us a query.