5 Ways to Rebuild your Credit History after Bankruptcy
Despite the lower credit score due to bankruptcy, you can move forward in repairing your credit and reorganizing your finances for the better. If you’re gearing up to raise your credit score and leave bankruptcy damage behind, we’ve got five easy credit repair tips for you. Thankfully, you can overcome the credit damage by implementing the smart strategies –
- Monitor your Credit closely
Post bankruptcy, monitoring your credit closely is vital. You need to make sure that you track the progress you are making, which can only be done by comparing your current credit reports to your past. So, after you have successfully filed for bankruptcy, you need to make sure that all the accounts that were discharged are actually reported as discharged and the discharged accounts have a zero balance.
- Have Your Payments Reported To the Credit Bureaus
Payment history is one of the most critical factors that have a considerable impact on your credit score. If you are taking loans or need to raise funds for quick cash, paying them back promptly will have a very positive effect on your credit report. So, you need to make sure that you report your positive activities to the credit bureau.
Once you’ve been discharged from bankruptcy, your debt to income (DTI) ratio is usually much lower than it was when you first filed. Your DTI is a major factor when you apply for new credit. If most of your income is already being used to pay for your current bills, it can be hard to get approved for things that you need, like a car loan or a mortgage. After you’ve completed a bankruptcy successfully, much of your debt has either been paid off or discharged. Try to keep any new debt, notably any new credit cards that you choose to take on, at a lower balance. Most credit experts recommend that you keep your credit cards balances below 30% of their spending limits – any higher and you could risk lowering your credit score even further.
- Use auto-pay with fixed bills
If you had trouble staying out of debt before, this is an ideal way to stay on track. You won’t have to do anything other than making sure your checking account has enough funds to cover the charge and monitor your credit card account statements.
Aside from this strategy being easy, it will ensure that a steady stream of positive data is being added to your credit report. With consistent charging and repaying, you’re demonstrating that you’re a reliable borrower, so your scores will rise.
- Apply for a secured credit card
The best and most beneficial way to build your credit after bankruptcy would be to apply for a secured credit card. Getting new credit may have been difficult while your bankruptcy was open. However, once your bankruptcy has been discharged, you can usually get qualified by bad credit lenders for new credit rather quickly.
Even though this is possible, you shouldn’t rush into a ton of new credit all at once. It’s tempting to want to immediately take on new credit after bankruptcy since much of your debt has likely been paid off or discharged, but don’t go crazy. If you take on too much new debt within a short period of time, you’re likely to lower your credit score even more.
It’s not difficult to rebuild your credit scores if managed your credit correctly. Personal loans are not a burden, just needs to be handled wisely by paying the dues on time. Various companies offer personal loans even to those borrowers with a less than perfect credit score. If you are looking for the simplest way to avail a personal loan, apply through LenDenClub.