Bankruptcy not only affects your finances but also your credit score and we can’t deny the fact that almost everything from jobs, insurance, purchase of a home and cars to even apartment rental depends on your credit score and bankruptcy can put your credit score in very bad state. A bankruptcy will remain on your credit report for up to 10 years and can keep your FICO score low until you improve your credit score. But don’t worry, after bankruptcy, there are some real ways by using which you can improve your credit score.
Some of the ways to rebuild your finances after bankruptcy are:
Examine your credit report:
The first thing you need to know is about your financial condition according to your credit report. Obtain a copy of your credit report and check for flaws and inconsistencies. Try to find out how it breaks down and identify any loopholes. You can get a free copy of your credit report every year from Equifax, Experian and Transunion.
Make payments on time:
The best way to improve your credit score is to make payments on time as most of the credit report includes information your payment history
Opt for secured card:
Getting a secured card for which you need to keep a security deposit with the issuer can help to improve your credit rating even if you don’t carry any balances on your card.
Take a loan:
After completing a year or two, post-bankruptcy, it will be better to apply for a car loan or a line of credit and repay the loan amount successfully. Getting a loan can cost you high a rate of interest to start off with but repayment will effect positively to your credit score.
Research properly before using credit repair services:
There may be the chance that some credit repair services approach you with an offer to repair your credit. Carefully examine and do research about the credit repair services before hiring them as their fees can be very expensive.
Know your credit card limits:
It will be better to know your credit cards limits and to keep your expenses below them. There are chances that you may have very low credit limit because of your credit score. Use your credit card wisely and make payment on time.
Avoid long-term loan:
Never opt for a long-term loan while improving credit score as these loans can put you in debt for a longer period and inability to repay can affect your credit score badly. In case of financial emergency opt for short term loans such as payday loans which you have to repay on your next payday.
Don’t close your accounts:
Closing of your accounts and credit card will not improve credit; instead it is going to damage your credit score badly as it decreases the amount of credit available to you.
