You’ve declared bankruptcy and this will stay on your credit report for the next ten years. You might feel like you’ll never be able to establish good credit again but there are steps that you can and should take after declaring bankruptcy.
Steps You Can Take To Rebuild Credit After Bankruptcy
Every positive step that you take in a financial sense after declaring bankruptcy will help to turn your credit around. The first steps you should take include:
- Create A Budget: No matter what your credit score is, it’s always important to have a budget in place. Seek outside consultation if you aren’t sure how to proceed. Creating a spreadsheet is always a good place to start.
- Create An Emergency Fund: Not many Americans have an emergency fund but it is an important financial step to take. Even a few hundred dollars can mean the difference between taking a loan or running up a credit card bill.
After taking these first steps, you can then start to rebuild your credit by:
- Paying off all balances on time. Paying bills on time is incredibly important and this is a very effective way to build credit.
- Inquire about a secure credit card. Although you need to provide funds in advance, this can be another effective tool when it comes to building credit.
- Inquire about a credit builder loan. If you think that you can manage it, contact a local bank about one of these loans. Credit builder loans are exactly what they are called – loans to help build credit.
- Ask someone to become an authorized user. This means that you will be listed as an authorized user on their credit card, which will be reported to credit bureaus. Although this won’t impact your credit the same way that a personal credit card will, every small step helps.
By making timely payments and repaying debt, you can rebuild your credit and once again show lenders that you are low risk. Be sure to stay on top of your credit by checking your score regularly. If you find information on your credit report that is incorrect you can dipute the errors.
How Long Will It Take To Rebuild My Credit?
There is no real answer to this question – the timeline is completely up to you and depends on which steps you take. Typically, even if you had good credit before declaring bankruptcy, your score will drop by at least 200 points when you declare. However, if you take the right steps you should start to see changes to your credit within 18 – 30 months after you file for bankruptcy.
You Can Survive Bankruptcy
You may feel shame or guilt because you’ve filed for bankruptcy and that’s OK. Take this time to regroup and look at this as a fresh start and an opportunity to learn. Thousands of individuals and couples declare bankruptcy every year and go on to establish good credit. Don’t ever be afraid to ask for help or to consult with a financial expert who can teach you how best to move forward.
Be Sure To Shop Around
Don’t hesitate to seek offers from multiple secure credit card companies and credit building loans. Not everyone has the same financial path and what may work for one individual or family may not work for you.