If you’ve just completed bankruptcy, it’s going to impact you in important ways. You’ll now have your debts under control, and you’ve been given a fresh start to rebuild your finances. If you’re like most people, you accumulated your debt slowly. It took a long time to get to the point where your debts felt unmanageable, but now your financial situation no longer feels like it’s getting worse. Collection agencies have stopped calling you.
Your biggest concern now is likely your credit rating, which took a significant hit. You may be wondering how that could make your life more difficult.
It’s important to keep in mind that you now have your finances under control. While it’s common for people who just completed bankruptcy to worry about their credit rating, you’re still in control of the situation. Here are some tips on how you can start rebuilding your credit.
How to Rebuild Credit after Bankruptcy
Many people who go through Chapter 7 bankruptcy worry about how much damage a bankruptcy does to their credit rating. While it’s true that bankruptcy stays on your credit report for 10 years, you can immediately start restoring your credit. There are several ways to offset the negative information on your credit report.
The first important step is to establish a household budget with the goal of living within your means. If you went through pre-discharge credit counseling, use the information you received in those sessions to outline how much you earn, what you need to spend on necessities (rent, food, utilities, gas), and what you have left for everything else. There are also nonprofit credit counseling agencies that can offer you free assistance on issues like family budgeting.
Another key goal early on should be to establish an emergency fund. It doesn’t have to be a lot; even having a few hundred dollars saved in the event that some unexpected expense arises, like car problems or home repairs, is helpful. Start saving any small amount you can for a rainy day, because the last thing you want is to be putting those repair expenses on a new credit card and then starting accumulating debt again.
Next, apply for a credit card. Don’t assume you’ll be rejected by each company. In fact, there are two types of credit cards available to people who have just gone through bankruptcy: secured cards require a refundable deposit, while subprime cards are designed for people with bad credit. You’re also likely to be able to get retail or gas station cards, and using any of them responsibly can help strengthen your credit.
These credit cards will likely come with higher interest rates after a bankruptcy, but they’re still an effective way to begin rebuilding your credit.
Other good tips include:
Review Your Credit Score
You can check your free annual credit report and should do this on a regular basis. You want to be on the lookout for any inaccurate negative information on there. If you do find errors, it’s important to get them corrected. You should check your credit score monthly to monitor yourself.
Pay Your Bills on Time
It’s important to pay any bills you have on time, and that includes your new credit card bills. Don’t run up more than you can afford each month, and get the cards paid off in full every month. This is a highly effective way to demonstrate responsibility to creditors.
Don’t Use Credit Repair Companies
You won’t lose a negative credit report by responding to an ad from a credit repair company, but you will lose your hard-earned money. Don’t believe those who claim they can remove a bankruptcy off your credit report. You can do that yourself over time for free by taking these steps to repair your credit.
Find a Loan Co-Signer
If you have a friend or family member with a good credit history, consider asking them if they would co-sign for a loan. This is a good way to help your score. But be sure you can pay whatever monthly amount is required because it can damage your relationship if you don’t keep up those payments.
Filing bankruptcy doesn’t ruin your credit forever — only you can do that by making mistakes following a bankruptcy. But if you’re ready to start improving your credit scores, following any and all of these tips is a great way to do that.
Get the Help You Need from Louisiana Bankruptcy Lawyers
Whatever stage of the bankruptcy process you’re at, from considering a possible filing to needing help afterward, the bankruptcy attorneys at E. Orum Young Law Offices are here to assist you in moving forward.
Our lawyers have more than 35 years of experience. We understand the complexities of filing for bankruptcy and can help ensure you’re on the best course toward financial freedom. Call 318-450-3192 for a free case review or contact them online today.