After filing bankruptcy, one of your main concerns should be repairing your credit. For some consumers, a bankruptcy filing can lead to a sense of hopelessness that can be difficult to escape. Once you come up with a firm credit repair plan, however, you can confidently begin the road back towards financial health. And with this type of plan, you do not have to wait too long to begin applying for credit again provided you take the necessary steps.
Create a Budget
Before you can begin applying for credit following a bankruptcy filing, you must have your finances in order. Spend some time living within your means, so that you know exactly what you can afford each month. Do not make estimates, but rather create a spreadsheet detailing your income and expenses. This will show you exactly how much money you have left to spend each month after paying all of your bills and prevent you from running into credit problems in the future.
Pay Your Bills
Every bill that is in your name is attached to your credit score. Therefore, make sure that you are never late with a payment after filing for bankruptcy. Making your monthly payments on time shows potential lenders that you can be trusted with a loan. Since your post-bankruptcy bill payment history will be all that lenders have to go on when you apply for credit from them, this is a very important aspect of rebuilding your credit.
Apply for a Store Credit Card
Most major credit card companies will not approve you after you have filed for bankruptcy, but many retail stores will approve you for their cards. These cards have lower limits than regular credit cards and can only be used at the stores they are connected to. Get a store credit card, make small charges to it each month, and then repay it right away. This will help you establish a new credit history while keeping your debts at a manageable level. Limit yourself to only one store credit card to start, as this will make it easier for you to keep up with your payments.
Get a Secured Card
Since it is almost impossible to obtain an unsecured credit card immediately after a bankruptcy, you have might more luck with a secured credit card. A secured card has a credit limit that matches a deposit which you must give to the card issuer. For example, if you want a credit card with a $500 limit, you must give the card issuer $500 to secure the debt. If you default on the card, the issuer will just take the $500. This is a low-risk option for credit card companies and banks and it provides you with easy access to a credit card, which can improve your credit score.
Monitor Your Credit Report
It is a good idea to keep an eye on your credit report, as reporting mistakes can happen occasionally. If you notice a mistake, make sure that you contact the appropriate credit bureau to have the issue fixed. Even a small mistake can have a large impact on your credit score following a bankruptcy, so it is vital that you catch any errors that occur right away.
You cannot rebuild your credit score immediately after filing for bankruptcy, but you can begin the rebuilding process. It will take some time for lenders to trust you again, but starting the process right away will enable you to get access to credit sooner than if you wait a while.