If you recently filed for bankruptcy, or if you are considering doing so, you may have concerns about how it affects your credit score. Although bankruptcy does negatively affect your credit, it is not a permanent thing.
Bankruptcy gives you a chance to start over and build healthy financial habits. By being responsible, you can improve your score pretty quickly.
1. Pay all bills on time
According to The Federal Reserve Board, it is important that you pay all your bills in full and on time. This includes all bills, such as utilities, rent, student loans and credit card balances. If you tend to forget, it may help to set up automatic payments online. Not only does paying bills on time help improve your score, but paying them late also further negatively affects it.
2. Monitor your credit report
After your bankruptcy, request your free credit report. Look it over carefully and make sure that there was a discharge of all the debts you listed in the bankruptcy. Correct any errors so they do not affect your credit.
3. Apply for a secured credit card
Ironically, having a credit card can help improve your credit after a bankruptcy. However, it can be more difficult to qualify for one because of the bankruptcy and corresponding credit score. As an alternative, Fox Business recommends applying for a secured credit card. You put a cash deposit down to secure the account. Just make sure you treat the card responsibly to avoid getting into debt again. Only charge what you can pay in full each month.
4. Avoid applying for too many credit cards
Keep in mind that each time you apply for a loan, such as a credit card, it goes against your credit. At the beginning, applying for only one card is a good plan.