Restoring Credit After Bankruptcy
January 16, 2018 | Napoli Shkolnik News
While filing for bankruptcy can provide you with the financial relief that you need when coping with overwhelming debt, filing for bankruptcy can absolutely destroy your credit score, making it nearly impossible for you to be approved for a loan, mortgage, or a line of credit. As such, taking steps to restore your credit as soon as possible after filing is important. Here are some tips to help–
Put Together a Budget
Before you do anything else, you should put together a budget that accounts for how much income you have, what your expenses are, and how much you need for future costs (the house you want to buy, car payments, emergencies, college, etc.). Having a budget in place will help to protect you from getting into a similar financial mess all over again.
This should be done with real thought and intent, the idea being that you will strictly adhere to this budget for the foreseeable future. It needs to be realistic and it is entirely possible that you may have to cut out certain items that could be considered “a luxury.” You want your budget to be attainable, so you may have to rethink certain lifestyle purchases if that is an option for you.
As you start to rebuild your credit, it is very unlikely that a creditor will offer you anything with a large credit limit, which is a good thing – you do not want to have to worry about too much too soon anyway. One small thing that you can do that can put you on the right track is to open a secured credit card, which is a kind of card that is backed by the deposit that you pay to open it. This provides security to the vendor but also for yourself, that you will stay within the guidelines.
Think About Co-Signing
If there is someone whom you trust–and who trusts you–with money, co-signing on a loan may be an option for you, and something that can help you to build your credit. If co-signing is nto an option, “authorized user status” for a credit card can also help. This means that you share a credit card with your spouse, for example. You are both authorized users.
Pay Your Bills On Time, Every Time
The very most important thing that you can do when rebuilding your credit is to make sure that you pay your bills on time, every time. This includes utility bills, cable bills, credit card bills, rent, mortgage, cellphone, and any other expenses for which you are liable. If you do not pay your bills on time, your credit score can suffer. If you can’t afford to pay your bills, figure this out when creating your budget and make cuts where necessary.
Want to learn more about filing for bankruptcy and its advantages and disadvantages? Be sure to consider all your options first, keeping in mind that each state has a different set of rules regarding bankruptcy. Some states have what is known as “Debt Relief” for those who qualify.
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