“Bankruptcy ruins your credit score permanently.”
That’s one of the biggest myths that I have come across in my life. It’s no secret that filing for bankruptcy can have a serious impact on your credit score, however the damage isn’t permanent and irreparable.
If you have recently filed for bankruptcy and would like to rebuild your credit score, then all you to do is to have a little patience, and follow the following steps to get your financial life back on the right track:
Make Sure to Use Any Credit That You Can!
It’s no secret that you will be seriously affected, both financially and emotionally, after filing for bankruptcy. In this case, you might be tempted to simply start using cash only. But the thing is using cash won’t play any role in rebuilding your credit. If you want to rebuild your credit score, you need to have a specific type of open credit account or an account that’s being reported to the credit bureaus.It’s really important for you to make your stand in front of the credit bureaus. You need to make them believe that you can manage your accounts.Sometimes, you might find it really hard to get it approved. And if you manage to get it approved, you’ll find the interest rates to be sky-high.
Use That Credit Wisely!
In the above section, we focused on how opening active credit accounts can help you rebuild your credit score. But the most important thing that you need to keep in mind is that you should use these accounts in a wise manner. Make sure that these accounts are active. If you have opted for a secured credit card, then you need to make sure that you use it at least once in a month. Plus, it’s really important for you to pay your bill on time. That’s how you will be able to prove to the credit bureaus how responsible you are. Once you do that, you will see your credit score starting to rebound.
Make All Payments On Time!
Positive payment and time are the only two factors that can help your credit score. It doesn’t matter whether your new credit card is secured or unsecured; you need to make sure that you are making payments on time. And that’s not it. You need to make sure that you are paying in full to refrain yourself from facing any financial troubles anytime soon. If you’re 30 days late with your payment, then it will simply reflect on your credit report. Plus, it will stay there for a period of seven years. Combine it with the bankruptcy filing that already exists, and it will turn out to be really hard to make your case with creditworthiness.
Keep Your Credits Balance Low!
Did you know that the people with the best credit scores are well-known to keep their balances low? It’s not about how much of the balance you are paying off each month. Instead, it’s about how much you charge. Any time of the month can your credit card issuer report your balance. That’s the reason you need to make sure that your total balance doesn’t exceed 30% of your overall credit limit. Lower than 10% is what will do wonders for you, in case you are rebuilding your credit.
Don’t Get Scammed by Credit Repair Companies
Chances are that you might have already come across mailings and advertisements from various credit repair companies that promise to eliminate bankruptcy out of your credit report. First of all, that’s a fake promise that they will be making. There’s simply nothing that these companies can do that will help you eliminate bankruptcy out of your credit report. They’ll take your money and only file a dispute. That’s all they will be doing. Don’t ever believe them. After a period of seven to ten years, you’ll witness your bankruptcy fall off from the report itself. Rather than finding out tactics to rewrite your past, it’s time for you to move on to writing a bright financial future for yourself.
Conclusion on Rebuilding Credit After Bankruptcy
Be patient and take it slow. Don’t hurry too much, or you might end up making a serious mistake, thereby doing more harm than good. Keep it to a single payment at a time. Charge what you can currently afford. Clear your balances each month and make sure to pay your bills on time and in full. It certainly will take a few years to rebuild your credit score and the bankruptcy filing to fall off your credit report. But in the end, it will all be worth the wait.