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Repairing Your Credit After Bankruptcy

Filing for bankruptcy can be quite traumatic. You know that you have made some serious financial errors and there is nothing that you would like better than to put them behind you. But how do you start rebuilding credit after bankruptcy?

After all, who would want to lend you any money going forward? You might be surprised to learn that there is a lot that you can do to improve your credit score, even if you have had to file.

Pay Your Bills on Time

Did you know that many of the utility bills that you pay on a monthly basis do get recorded on your credit record payment history? It is therefore extremely important for you to pay each and every bill you get on time.

This helps to start building up your score again.

Of course, it does not have the same impact as a credit account, but it does help.

Get a Small Credit Account

You do have options here, believe it or not. There are companies that will give you a credit card again, as long as strict conditions are met. This could mean a pre-deposit card and paying a much higher interest rate, but it is one of the best ways to re-establish yourself as a good payer.

On a monthly basis, use the card a few times, for little amounts at a time. At the end of the month, pay the balance in full. By not using the full available credit limit and by always paying the card in full, you are giving your credit score a good boost.

While doing this, pay the card in full and then don’t use for a least a week. This also improves your score because it shows that you are not constantly in debt.

After doing this for a few months, you can make a large purchase that you pay off over a few months. The rule here is that you must always pay more than just the minimum amount and always make your payments on time.

The only other rule to follow in this case is that you should never max out the card. Those with the highest credit scores don’t use more than 50% of the credit available to them at the very most. Stick to that and your rating will improve.

Budget Better with Your Card

How much do you spend on fuel every month? Set aside the money that you would have used to buy fuel and pay using your credit card instead. At the end of the month, take the money that you set aside and pay it into your credit card.

Make a point of prioritizing any bill payments so that you can build your ratings up as a good payer again. This is going to help you rebuild your credit rating more effectively than any other technique will.

And, when your rating has been restored, follow these same tips to keep it as high as possible. A good credit score helps you secure better interest rates and better insurance rates. It is worth building it up again.