In my line of work, if there is anything I’ve noticed, it’s how hard rebuilding credit after bankruptcy can be. It deals quite a blow to your credit score, but if you follow the right path after bankruptcy, your credit situation could be better than ever in the long run.
At Credit Repair Gal™, this is one of the many things I teach and help my customer with- a way to maintain a healthy credit, ethically. While I can’t give out all the details, we can take a look at some preliminary tricks today!
1 . Keep Tabs
After the bankruptcy process is done and dealt with, you need to keep a close watch on your credit. You want to see whether the steps you’re taking are negatively or positively affecting your score. If you notice any discrepancy in your report, inform and address it immediately. An unfortunate mistake shouldn’t affect your score.
It takes a long time for bankruptcy to be discharged from your credit report, even 10 years. However, focusing on prompt payment and avoiding utilizing your credit should accelerate the process.
2. Credit Card
Traditional credit cards might not be a possibility for the time being if your report already has a bunch of negatives along with the bankruptcy issue. Secured credit cards and Retail card have proven to be an attractive alternative. However, before you apply for one, discuss it with your attorney thoroughly, especially if you’re on Chapter 13 bankruptcy. There are some rules at this stage that make applying for any kind of card hard.
For secured credit cards, a deposit has to be made so the original credit line can be secured. The credit limit in this case is the fee subtracted from the amount you have deposited. So, when you’re using this card to raise your credit score, the purchases you make have to be in small amounts.
The payment has to be timely, no matter what. Keep your balance low, at least 15 percent lower than the credit line. The credit card company should also be one that has a good track of reporting to the major bureaus.
This way, your credit report will have an exemplary payment report, which goes a long way in your DIY credit repair mission.
The credit approval needed for retail cards tends to be more flexible. However, the interest rates are quite high. But, if you continue to make on time payments and small purchases, it can help revive your credit score.
3. Account Type
Your credit account type certainly has an impact in the years you’re trying to rebuild your credit score after bankruptcy. Something like taking out a personal loan for a small amount and using it to repair something in your home or even making timely payments can help. If you have more than a single account, your score is affected positively.
4. Learn and Grow
Take a look at all the mistakes that led to this situation.
- What is it that pushed you to the point of bankruptcy in the first place?
- How did you spend your money? Are your budgeting skills simply no good?
- What needs to be changed?
After you have gone through the bankruptcy process, you might have a clean slate for the time being. If you aren’t careful though, you can easily fall back on your past habits.
Following these steps isn’t a guaranteed way to rebuild your credit score. You have to be responsible for your own actions. Make timely payments and make financial decisions that won’t hurt you again. If you don’t know where to begin, I am always here to guide you!
Angela Kovacs of Van Buren Township, Michigan is the founder and CEO of Credit Repair Gal. A credit restoration firm in Michigan.