Repair Your Credit Score & Move Forward
People facing serious financial struggles can find relief through bankruptcy. Though it is a great way to get a fresh start, it is not a perfect cure for financial troubles. After you have completed your bankruptcy, your credit score will have taken a hit. Damaged credit can make it difficult to obtain a loan, rent a home, or achieve other goals.
But don’t panic—there are ways to rebuild your credit and gain upward momentum toward future financial stability. The benefits of bankruptcy are worth it if you can put in the work it takes to repair your credit score. Follow the steps below to regain financial stability after filing for bankruptcy.
Stick with a Realistic Budget
One of the most important things you can do after successfully finalizing your bankruptcy is to make smart financial decisions—and that starts with setting a budget. With a realistic and attainable budget in place, you’ll be able to track where your money goes and cut out frivolous spending. You’ll also be setting yourself up for financial success by prioritizing important payments—like rent, groceries, and utility bills—over non-necessities.
It can also help to start a small emergency fund. Put a little bit of money away each week or every month. That way, you’ll have a sizeable fund in the event that an unexpected emergency arises. Use this money instead of reaching for your credit card and amassing more debt.
Stay on Top of Monthly Bills for Undischarged Debts
After bankruptcy, your priority should be to pay off undischarged accounts. Whether you have undischarged student loans, tax debt, or child support obligations, it’s vital that you stay on top of these monthly payments. Over time, your credit score will go up thanks to those diligent payments.
If Possible, Obtain New Credit
It’s easier said than done, but securing new credit can significantly improve your credit score. Of course, many lenders and creditors are hesitant to grant someone credit after filing for bankruptcy, but some will. Consider applying for a credit card that approves applicants with bankruptcy on their record. A secured credit card is another option.
Be sure to avoid over-applying for new credit. Lenders will notice if you submit several applications at once and may be less likely to approve you under those circumstances.
Keep Your Credit Card Balances Low
Having a low credit card balance often translates to having a higher credit score. Avoid relying on your credit card—consider using a debit card or other forms of payment for purchases. Stick with your budget and refrain from overspending on non-necessities. If you do use your credit card, pay it off regularly.
Make Sure Your Credit Report Is Accurate
Too often, people avoid checking their credit out of fear that it will negatively impact their score. Remember: You get one free credit report per year, so take advantage of it. Make sure that your credit report accurately reflects your finances. In fact, it is actually a good thing that your report reflects your bankruptcy.
Capital Justice Attorneys, LLP Is Here to Help
If you are feeling overwhelmed about how you’ll move forward financially after finalizing your bankruptcy, remember that it is possible to regain stability with enough time and effort. The team at Capital Justice Attorneys, LLP offers the compassionate advocacy you need as you navigate this next chapter of your life.