Can I Rebuild My Credit Scores After Filing For Bankruptcy?

Bankruptcy is a complex and long drawn out legal process. It sometimes can have a stern effect on your credit, but the effect doesn’t last forever. Bankruptcy although stays on your credit report for 10 years, however its effect reduces as time passes by. Meanwhile, you could begin to improve your credit immediately by considering a few proactive steps.

Practice wise credit habits

Practicing wise personal finance management is the key to creating a brilliant credit after bankruptcy. When you abide by the principles, your credit recovers sooner –

Make timely payments – Payment history happens to be the biggest factor in deciding on your credit scores. When you make your loan and credit card payments on time, you receive positive information on your report. This eventually helps you reform your scores and be reliably presentable to your future creditors.

Always stay on top of your bills – Paying your household bills such as utility accounts and cellphone on time helps you avoid late payment penalty fee and also prevents your accounts from going to the creditor’s collections which can again damage your credit. On-time payments of your utility, cellphone, cable bills and online video streaming bills can actually help you rebuild your credit scores – all you need is a planned spending.

Avoid using plastic – Holding a credit card and making timely payments is a brilliant way to rebuild your credit. However, contrary to the popular myth, you don’t have to carry a balance to maintain a good credit. In fact, the smartest and quickest way to rebuild your credit is by paying off your credit card balances and continues to pay them off every month in full.

Save for unforeseeable situations – If you can’t find any money in saving when needed the most, a little however unpredictable expense can throw your finances out of the track, forcing you to take on new debts, while skipping existing payments. Even though you fail to put tons of money into emergency savings fund, you can still begin by marching towards a goal that is achievable for you, such as saving one month’s rent or those expensive dinners at expensive restaurants.

Give it some time – When it comes to rebuilding your credit scores, quick fixes have always put people in more troubles rather than solving the existing ones. Credit repair agencies claim that they can repair your credit scores in no time, but their ostensible quick fix comes with hefty price tag and might also include irreparable risks. Eventually, the most effective and affordable way to improve your credit score is by working on it yourself.

Can I apply for credit card after filing bankruptcy?

Once you have filed bankruptcy, it might be hard for you to get approval for new loans or credit card, however if you have open credit accounts, that will help you rebuild your credit scores.

Secured credit cards are the safest way to get started. You need not good credit in order to qualify for secured credit card. Rather, you qualify through making deposits that the lender can keep in case you have to stop making payments on that account.

Below are some of the key features to consider in a secured credit card –

Report to credit bureaus – Be sure that the card issuer is going to report your account details to all three major credit card bureaus, including Equifax, TransUnion and Experian, allowing you even better opportunity to rebuild your credit scores.

Option for conversion – Your secured credit card will ideally convert to unsecured one after a certain amount of time. As soon as it converts, you receive your deposit back, if you have had paid your balance already. You can now keep using the card to help rebuild your credit scores.

Deposit amount – The bigger the deposit on your secured card, the higher the limit. When you have more credit available to yourself – which you are not using – it helps you improve your utilization ratio and also rebuild the score.

Rates and fees – Interest rates and fees might be high compared with those of unsecured cards. Be sure you have reviewed the APR, maintenance fee, annual fee and any other associating fees to select the most suitable secured card and keep the costs to minimum.

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Created on Jan 13th 2021 01:54. Viewed 369 times.

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