A Guide To Help You Build Credit After Bankruptcy

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Bankruptcy can be a challenging time and recovery is sometimes a long and arduous road. Although you can apply for a personal loan after bankruptcy, there are chances that you might get denied for the loan or you might be charged high-interest rates. Fortunately, there are ways to help rebound your credit after a bankruptcy. Consider a few tips to make the process a bit easier and help you recover faster.

Take a Closer Look at Your Credit Report

Because you are working to prove yourself creditworthy once again, it is important that anything that remains on your report is accurate. Comb through it with a fine-toothed comb and make sure any accounts associated with the bankruptcy have a zero balance. There are also several ways and apps that can assist you in monitoring your credit report on a regular basis. 

Sometimes, creditors will continue to report inaccurate balance information after the debt has been discharged by the bankruptcy. Dispute any inclusions with the credit bureau immediately to update the account. 

Sign up for a Secured Credit Card

You may not initially be able to get a traditional credit card, especially if the bankruptcy is fresh. However, you may be able to get a secured card. This kind of credit card allows you to make a deposit, which will represent the amount of your initial credit line. 

For most cards, if you pay on time for a certain period, they will extend your credit beyond that of the initial deposit. This is a great way to rebuild credit and show future creditors that you can responsibly manage debt. 

Consider a Small Personal Loan

Diversifying debt that you can manage is important in re-establishing your creditworthiness. A small personal loan that you can easily and quickly payback is another way to prove to lenders after bankruptcy that you will not repeat the mistakes of the past. 

You can either use the loan to pay off your debts or to establish your nest egg. Just make sure it is small enough to manage and pay off quickly, ideally in a year or less. 

Pay Everything On Time

One of the most important aspects of rebuilding credit after a bankruptcy is proving to would-be creditors that you can and will pay on time moving forward. Part of this process is managing debt responsibly, guarding against taking on more than you can manage from a financial standpoint. 

The other part is paying debts on time. On-time payments take on new importance after a bankruptcy, as some creditors may be willing to overlook the bankruptcy if you can establish a history of on-time payments from that point forward. 

Budget and Save

Another way to rebuild your credit score after a bankruptcy is through budgeting and saving. The budgeting component ensures that you will obtain and manage credit accounts responsibly. The saving component provides an emergency fund so that if your financial circumstances shift suddenly, you are prepared and can use your savings as needed. 

Bankruptcy does not have to completely darken your financial future. There are plenty of ways to overcome the stigma of bankruptcy and rebound your credit score. 

Learn more about fixing your credit and raising your score to get your financial life back on track here

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