Rebuilding Your Credit After Bankruptcy
Rebuilding your finances after bankruptcy might seem like an impossible task. After all, once you have the mark of bankruptcy on your credit score, there's no way you can enjoy a healthy financial life again - right? Actually, while your credit score after a bankruptcy might be at an all-time low, it's a surprisingly ideal time to work on your credit score, as you're literally starting over with a blank financial slate. But how can you build up your credit score again?
Simply follow these exact steps right down to the word, and watch as your credit score skyrockets in just a few years after declaring bankruptcy:
Enroll In An Automatic Debit Program
Haven't done this already? If not, you're really cheating yourself out of a great way to ensure that all of your credit card and utility bills are paid on time, with little effort on your part (heck, even your student loan and mortgage can be paid by automatic debit). Automatic debit takes money out of your bank account, so you'll always pay your bills on time without worrying about overdue payments and their effect on your credit score. And since your credit rating is mainly composed of your payment history (35%), it's an ideal way to get one of the major factors that makes up your credit score down pat.
Don't Avoid Credit Cards
It may seem like a contradictory thing to do, but when it comes to rebuilding your finances after bankruptcy, don't shun all plastic. In fact, keep at least one card with an open credit line around, as a large part of your credit score is determined by your debt to credit line ratio (30%). You might be worried about your behavior with a credit card, so be sure to take advantage of credit counseling courses with your bankruptcy court. You'll learn better financial behavior that will prevent you from declaring bankruptcy ever again.
Get A Prepaid Card
Can't seem to reign in your spending to use a credit card responsibly? It's important to have a credit card to boost your score; however, this won't do anything for you if you can't get a hold of your spending in the first place (remember that tip about using a credit counseling class? Make sure you follow it!). When it comes to credit cards, you'll need to seriously consider owning a prepaid card, which works wonders towards improving your credit score. Prepaid cards are viewed the same as ordinary credit cards by the credit bureau, so you'll still get the benefit of boosting your rating.
When it comes to your finances after bankruptcy, you don't have to assume that you'll be a financial pariah for the next several years. With smart financial behavior, diligent credit use and a positive attitude, you'll rebuild your credit score after bankruptcy in no time.