Tips to Rebuild Credit After Bankruptcy
For many people, bankruptcy filing follows the financial struggle of months or years. And people think that their credit would be ruined forever. However, it is not the same. Bankruptcy can indeed affect your credit negatively, however, it could be better than the consequences of the debt such as liens, repossessions, and garnishments.
Ways to Rebuild Credit Post Bankruptcy
Bankruptcy provides you the relief of a clean financial state. However, it also gives the worry that you might not have decent credit again. It stays on the credit report for seven or ten years. It is important to note that the impact of bankruptcy lessens as time passes. Rebuilding the credit after bankruptcy is a bit hard but not difficult. Here are the tips that can help you rebuild credit
- Keep an Eye on Credit Reports and Credit Scores
You are entitled to one free copy of the credit report every year from three major credit-reporting institutions. It is advised to take advantage of and examine the reports regularly for missing information or errors. In case you find an inaccuracy, you can report that to the concerned credit-reporting agency. The credit would rise once the negative mark is removed.
- Apply for Secured Credit Card
It might be hard to get approval for new credit cards and loans after bankruptcy. However, a secured credit card is a great way to rebuild the credit. You do not require good credit to qualify for a secured credit card. By making a deposit that the credit can keep in case you stop making the payments on account, you can qualify for a secured credit card.
- Don’t Close Accounts
The individuals who cannot resist the temptation of using credit cards, they often prefer to close the accounts. This seems a logical solution. In case the account is closed, you would not be able to spend money and get into debt. However, closing the accounts can cause damage to your credit as the bureaus consider the credit you have. When you close the account, the amount is reduced and in turn, this action lowers the score.
- Get a Gas Credit Card
While determining the credit score, the bureaus consider not only the debt you have but the types as well. Once you have a secured credit card, it is advised to apply for a gas credit card. It is a different kind of debt that is relatively easy to obtain. Gas is a necessary expense and these cards provide an opportunity to report good credit at places that you would be spending normally. And it is advised to spend responsibly.
Apart from, ensure you make payments on the non-bankruptcy accounts. When you file for bankruptcy, few accounts might be excluded. Few debts such as student loan debt cannot be a part of the bankruptcy discharge. In order to improve credit, it is essential to make payments. In case you are still apprehensive about the effects that bankruptcy can have on your credit, a consulting expert from a reputed Las Vegas bankruptcy law firm is advised. The attorney would review your situation to determine if bankruptcy would be good for credit in the long run.