Posts Tagged ‘rebuild credit after bankruptcy’

A 4-Step Guide To Rebuilding Credit After Bankruptcy

It is true that bankruptcy stays on your credit report for a period of seven to ten years, but there are still several ways out there that can help you recover your financial health even during the term of bankruptcy. In order to rebuild credit after bankruptcy, there is no need to wait for such a long period (7-10 years) for the bad marks to close; you can put things into action right now and work on to improve your credit worthiness right away. In general, all you have to do is to implement some healthy changes in your strategies for money management, spending habits, and lifestyle. You can start right from the moment when you file your petition. Even if you have a very bad credit report at present, you can boost your credit standing significantly by employing these simple steps.

Change Your Perception; Focus On The Positive Things

Getting bankrupt is a very bad experience. The word ‘bankruptcy’ itself has negative connotations, but you can reduce your anxiety and give yourself peace of mind by focusing on the positive aspects. This perception makeover is a crucial first step if you seriously want to rebuild credit after bankruptcy. Just count the benefits it brings – all harassing collection activities are now stopped and most of your debts are now eliminative. It is your opportunity to give your financial life a fresh start. Keep reminding yourself that regaining good credit even at this stage is within the realm of possibility. A disciplined and consistent approach is all you need.

Check Your Credit Reports Regularly

It is very important for you to keep in mind many times inaccurate and incomplete records on your credit report make things look much worse. Therefore, you must monitor your credit records consistently at least every 3-6 months. You can request the three major credit bureaus to send you the reports. While you review the same, you should focus on the accuracy and completeness of the information. If you find anything wrong or incomplete, you must file a dispute immediate and get things rectified. A credit report based on incorrect and wrong information can significantly damage your credit health. In order to rebuild credit after bankruptcy, you first need to make sure that the entries on your credit report are accurate.

Open A Bank Account

The third step is to start saving money. And, the best way to do this is to open a savings bank account. Your target should be to deposit at least twenty-five percent of your monthly income into your savings account every month. You will be able to save several hundred dollars within a few months; the exact period though will obviously depend on how much you earn.

Get A Secured Credit Card

Once you have a good amount of savings, you can use the money to obtain a secured credit card. But, you have to be very careful with your selection of the right credit card; make sure that the terms are decent and that the rates are not very high. You can accelerate the process of rebuilding credit after bankruptcy by being on time with the payments toward your secured credit card. Do not make the mistake of just making the minimum monthly payments. Pay the balance in full every month and make sure that your credit card company reports about your timely payments to the three major credit bureaus. This is a guaranteed way to add positive entries on your report, which will gradually eat away the influence of negative entries, and very soon, you will notice that your credit score has started going up.

The most important thing is that you must pay all your bills and charges in time. For this, you will obviously have to demonstrate some great financial discipline. You have to do some tight budgeting, which may mean some compromises, such as cutting down your expenses on entertainment and luxury. But, all such little sacrifices will only help you rebuild credit after bankruptcy; so, they are definitely worth your while.

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