Life After Chapter 7: Rebuilding Credit After Bankruptcy

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Trying to rebuild your credit after bankruptcy?

Wondering how you can get your finances under control?

Declaring bankruptcy can be a very difficult experience that can make you feel like your life is over. However, you can come back from it and set your finances straight again with a little bit of time and some hard work. 

Below we’ll look at the top tips for rebuilding credit after bankruptcy.

1. Update Your Report

After you go through bankruptcy it’s important that you check with the credit bureaus to make sure that they have all of the most up-to-date information on your situation.

A bankruptcy filing and discharged debts can remain on your credit report for seven to ten years. However, the benefit to the bankruptcy is that it should alter any unpaid debt so that it is listed as having zero balance owed. Debts may also be listed as being part of the bankruptcy or as being “discharged.”

Remember, none of these eligible accounts should be listed as active, as having a balance due, or as simply being late. Creditors can be slow to update these types of records that they have on you, so you should be sure to check with them to ensure they are getting corrected as quickly as possible after your bankruptcy is completed.

2. Get a Secured Card

One of the best things that you can do to start building your credit after a bankruptcy is to get a secured credit card. Needless to say, it can be difficult to get a typical credit card after declaring bankruptcy, but luckily, a secured card is much easier to get.

With a secured card, you’ll have to deposit a designated amount to get started. The money you deposit will then become your line of credit.

Once you have a secured card, you can then use it month after month to quickly build up your credit. However, it’s important that you use it responsibly. Try to only use it for purchases you’ll know that you can pay back by the end of each month.

3. Consider Retail Cards

If your credit score is less than ideal, a retail or department store card is another type of card you can get much more easily than a regular credit card. These cards may be a bit more difficult to get that a secured credit card but can also help you rebuild your credit.

These cards will be limited in use, however, as many of them can only be used at a particular store. There are two types of store cards: open-loop and closed-loop cards. Closed-loop cards can be used in only the store itself. Open-loop cards, on the other hand, will feature the Visa or Mastercard logo and will be able to be used in other places as well.

Generally speaking, closed-loop store cards will be easier to get than open-loop cards will.

4. Get a Personal Loan

In addition to getting a secured credit card or a store card to start building up your credit, it’s also a good idea to consider getting a loan. After you’ve built up your credit some with these cards, then you should look for a way to diversify your credit.

A small personal loan can be a good choice that can help you do this. Loans for bad credit no guarantor, for example, can be easy to get and will be fairly simple to manage and repay.

Make sure that when you get a loan that you’re careful with it and that pay your monthly payments on time. Additionally, if there isn’t a prepayment penalty you may even want to pay it off a bit more quickly by paying more than the minimum each month.

5. Be Responsible

Once you have a secured credit card, a store card, and a small loan it’s important that you remember to stay responsible. It’s not enough to simply get these things and expect it to instantly bring your credit score up automatically.

You need to stay aware at all times and stay on top of your debt. Keeping credit utilization low and never missing a payment is essential. By playing it smart you’ll be able to rebuild your credit over time.

Remember that rebuilding your credit won’t happen overnight. You need to stay responsible consistently over an extended period of time if you really want to experience the best results.

6. Monitor Your Score Closely

If you’re trying to build your credit score up it’s essential that you actually know what your score is first. You should be using credit checking tools to monitor your score closely and ensure you’re alerted every time there’s a change.

When monitoring your credit, you’ll know about it whenever any hard or soft inquiries appear on your report. You’ll also be able to check and see if there is anything on your report that that shouldn’t be. Additionally, you’ll also get notified if there are any suspicious activities or anything that may be identity theft. 

Remember that sometimes there are errors on your report. These errors can potentially hurt your score. Because of this, you’ll want to monitor your score closely so that you can dispute these things and get them off of your report as quickly as possible.

7. Stay Calm

When trying to rebuild your credit after bankruptcy it’s important that you stay calm. While it can be stressful to declare bankruptcy it can be just as difficult to recover afterward. It’s important that you do the best you can to remain calm and to be patient.

While it will take time for your credit to get to a respectable level again it is not impossible. By taking it slow and doing the actions listed above your credit will slowly but steadily climb back up again.

Make sure that you take your time. Breathe deeply and try to keep your stress levels in control. If you do, you’ll be able to get through it quickly and will continue to live well while you wait for your credit score to recover.

Successfully Rebuilding Credit After Bankruptcy

Rebuilding credit after bankruptcy can be a difficult task but it’s definitely not as hard as you may think it will be.

By using the tips listed above you’ll be able to rebuild your credit more quickly than you thought was possible. You’ll ensure that your bankruptcy is someday forgotten about completely.

Did you enjoy the article? Have questions or comments? Contact me today to let me know what’s on your mind.

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