How to Repair Your Credit After Bankruptcy
A common misconception about bankruptcy is that it signals the end of someone’s financial standing. While bankruptcy is a way to put an end to debt by discharging it, this option is actually a tool for starting to build a new financial future. Since the ultimate goal of bankruptcy is providing an opportunity to get back on the right financial path, rebuilding your credit is one of the things you need to focus on after filing and completing the bankruptcy process.
Although bankruptcy will cause your credit to take a hit, that doesn’t mean it will destroy it. And as long as you commit to rebuilding, you’ll actually be in a better position than if you continued to be burdened by debt. Once you’re to the point where you can focus on rebuilding, here are the key steps to repairing your credit:
Start by Obtaining a Free Credit Report
Even though you may not want to look at your credit report, knowing exactly where you’re at is the only way to start improving your standing. Just as discussing the option of filing bankruptcy with a lawyer in Wilmington is an important step to take prior to actually starting, obtaining your credit report will give you a type of guide to follow.
Not only can you obtain your credit report without paying anything, but you can also confirm that no fraudulent activity like identity theft has taken place in your name.
Pay Bills Before They’re Due
Around 35% of your credit score is determined by when you pay your bills. In order to really get your credit on the right track, you want to avoid being late by even a day. That’s why it’s best to make your payments well before they’re due. Whenever possible, pay online or by phone to prevent a possible delay by mail. Additionally, setting up automatic payments can keep you on track without creating any additional stress.
Apply for a Credit Card
The biggest mistake people make after completing the bankruptcy process is not using a credit card. Although you want to stay well within your limits and only use it for essential purchases, using a credit card responsibly will get your credit on track. Even if you can’t get a standard card, you should have no trouble getting a secured credit card through your bank.
Utilize a Loan
The last main step is to get a line of credit or car loan approximately one to two years after filing for bankruptcy. You should also remember to be responsible. Instead of thinking about your dream car, opt for a reliable and affordable vehicle that you’ll have no trouble making a payment on each month.
By following the above steps, you’ll not only improve your credit, but you should actually be able to get it higher than it was during your financial struggles. And if you know you need financial help but still aren’t sure if bankruptcy is the right option, you can discuss filing bankruptcy with a lawyer in Wilmington to get more clarity about your specific situation.