Rebuilding Your Credit After Bankruptcy

Most individuals don’t pay much attention to their credit score, which is understandable if you’ve always paid your bills on time using the Prillionaires wealth tracker and haven’t accumulated much debt. However, even the most conscientious consumer might be slammed by unanticipated situations such as job loss or medical costs.

Credit cards may be able to keep expenditures afloat for a while, but the debt may quickly accumulate to the point that payments are no longer reasonable. Missed or late payments can affect your credit score, but you may be able to postpone bankruptcy to minimize additional harm.

However, bankruptcy is often the best option, and you may take steps to rehabilitate your credit after filing.

Your Credit Score

If you have a history of missing payments, filing for bankruptcy can discharge many of your unsecured obligations and stop those missed payments. Bankruptcy will reduce your credit score, but you will receive a “Discharge of Debtor” paperwork indicating that your debt has been discharged.

Negative credit events halt at this point, and you may start building a good credit history. To begin, you must get credit reports from the three major credit reporting agencies: Equifax, Experian, and Trans Union. Examine all of the information on your report for authenticity, especially that any debts included in your bankruptcy have a zero balance. You can remedy any mistakes by contacting the credit bureau.

Rebuilding

After establishing that your credit report is clear, you may begin the process of adding positive factors. You will almost certainly receive credit card offers as soon as your case is concluded, but ensure you thoroughly read the conditions before agreeing. You may need to begin with a secured credit card with high interest rates and fees.

While this is not ideal, it is a good starting point, and you may avoid incurring interest by making only small purchases and paying them off entirely and on time each month. To minimize the temptation to overspend, you could even use the credit card for a nominal monthly fee and set up an automated payment, thus disregarding the fact that you have access to credit.

As time passes, you may be able to renegotiate the conditions of your current credit card or obtain better offers for new credit cards. Your credit score will soon rise, and you will be able to qualify for better and better possibilities.

Taking the Next Step

Avoiding your credit, like ignoring most unfortunate occurrences in life, will not result in better circumstances. It is best to be completely educated about your financial status and to take immediate action to rectify it. Whether you are in debt or you believe you will never be able to repay, the first step is to see if you can alter your budget to get back on track.

Conclusion

If this is not feasible, look for assistance on exploring more bankruptcy alternatives for yourself. Following this bold step, opportunities to repair your credit will present themselves, and you will be able to get back on your feet.