If you’ve recently filed for Chapter 7 bankruptcy, chances are your credit was in tatters. Contrary to popular misconceptions, bankruptcy won’t ruin your financial future. Start with the basics, and work your way back to a good credit score by following these steps.
Start with a budget:
After a bankruptcy, lenders are looking for proof that you can pay your current obligations and have a little left over. A lighter debt burden looks good in the lenders eyes, says this article on NerdWallet.com. Start by creating a budget, and stick to it, to stay on top of your finances. Make on-time, monthly payments on your current debt, and stash away any extra income in an emergency fund. Research by the Urban Institute show that having an emergency fund can protect families from resorting to predatory loans or credit cards.
Assess your Situation:
After the bankruptcy is said-and-done, it may be wise to check your credit report for errors. Inaccurate, negative information can make it harder to dig yourself out of debt, so quickly dispute any discrepancies and get them corrected.
Restore your Credit Score:
Once you’ve regrouped, and are in the clear of any future debt, it may be time to start looking for products to rebuild your credit and make you look less risky to borrowers. According to this article on NerdWallet, there are four trustworthy products to look into while rebuilding your credit: secured loans, secured credit cards, co-signed credit cards or loans, or authorized user status.
Be Vigilant:
It is of utmost importance that you are vigilant about paying any future debt on time to avoid delinquency. Keep all future balances low and manageable, and be careful not to charge more than you can pay back. Over time, and through hard work and dedication, you will see improvements to your credit reputation.
