How To Rebuild Your Credit After Bankruptcy – You Can Do It!

03
January

For overall financial health, one of the most important aspects is to have a strong credit score. Your credit score is an indicator of your likelihood as to whether or not you will repay a new loan on time and as agreed. Because of this, many banks use your credit score as a large deciding factor as to whether or not they will give you a new loan. Unfortunately, getting and keeping a good credit score can be difficult. For those who have previously declared bankruptcy, rebuilding credit can be an even more slow and painful process. Luckily, there are several ways a person can begin to rebuild their credit score over time.

The first way to improve your credit score after bankruptcy is to open a secured loan or credit card. After declaring bankruptcy your credit score will decline significantly and most banks will be unwilling to offer you a loan or line of credit. Luckily, you will be able to get a secured loan or credit card. These forms of credit will require you to put money into a bank secured account and the bank will then offer you a loan or line of credit while using your money as collateral. These accounts are beneficial because they not only come with low rates and fees, but each payment you make back to the bank will be reflected on your credit report and improve your score.

If you do not have the liquidity to put forth for a secured credit card or loan, you could improve your credit by getting a co-signor to sign your loan. A co-signor accepts legal responsibility for all payments, and because of this, the bank will be more willing to approve a loan application if the co-signor has a strong financial backing. Since you will also be on the loan, making successful loan payments will also help rebuild your credit.

The third way to improve your credit score after bankruptcy would be to attempt to settle disputes with your creditors. When you declare bankruptcy your creditors will either lose all or a portion of the money they lent to you. This will then be reflected on your credit report as a charged off account. To improve your credit score, you could begin to try and re-pay your creditors. Once the balances are paid off in full, the charged off account will be cleared, and your score will begin to repair.

The most effective way to improve your credit score after bankruptcy is to change the way you handle your finances. Many people find themselves in bankruptcy simply because they spent more money than they earned. Going forward, these people could improve their score by spending less than they earn and making all debt payments on time. While it will take a few years to accomplish, this simple strategy will eventually result in you having an improved credit score.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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