Ways to Rebuild Credit After Bankruptcy

One of the reasons many people staunchly refuse to consider bankruptcy as a viable method of debt relief is the belief that their credit will be irreparably ruined. This is far from the truth: while your credit will be impacted by declaring bankruptcy, most people’s rating has already been damaged so severely through late and missed payments that a declaration won’t actually hurt it that much worse. On top of that, bankruptcy gives you a unique opportunity to work hard and get your financial independence back. Doing so requires some diligence, but by following these simple tips, you may find that your credit rating quickly improves dramatically in just a few short years.

Make Payments on Time

One of the most important and beneficial things you can do for your credit rating after declaring bankruptcy is to change your financial habits for the better. You may have grown accustomed to making late payments or shifting around your finances to prioritize what you had liked before, but now’s a good time to make sure you’re both saving money and making payments on your bills when they’re due. Because your credit score generally weighs your current history heavier than older actions, you might find your score improves far quicker than you thought.

Open a Small Credit Card

When you declare bankruptcy, you’ll probably need to close out a lot of your old credit cards. However, this doesn’t mean you won’t be able to open a new one. In fact, many credit companies are willing to offer those who have just declared bankruptcy a small credit card, usually with a low limit (around $500 or so) that’s secured by a cash deposit. Making purchases on this credit card and then paying off your balance every month can do wonders for rebuilding your credit history by showing you can and will make monthly payments when asked.

Spend Wisely

While many people find themselves in debt due to uncontrollable circumstances, there’s no question that some others did not help their cause by spending superfluously on things they didn’t need, only to find they couldn’t pay things back when money got tight. Now is the time to break that habit: whether you’ve declared Chapter 7 or Chapter 13, your bankruptcy gives you the chance to reset your financial habits, including determining what you need to buy and what you can do without. Who knows? You might find that you enjoy life more without some of the things you had before.

If you’re considering declaring bankruptcy, talk to a Myrtle Beach bankruptcy lawyer today! Call Lam Law, LLC at (843) 695-7700 for a free consultation.