Once your bankruptcy has been discharged, you’ll likely be relieved and a large burden removed from your shoulders. However, now it’s time to look forward and plan to rebuild your credit and maintain a positive credit rating. The beginning can be confusing and frustrating. You don’t want to end up in the same situation as before, but you also want to take advantage of your fresh start. Consider these tips for repairing credit after bankruptcy.
Examine Your Credit Report
You might think after your bankruptcy, that your credit report is automatically clean and accurate. This isn’t always the case. In fact, one in five consumers has found an error on a credit report. Especially after bankruptcy, it’s important to examine your report and make sure everything is reported accurately. If there are errors, request that they are corrected immediately.
Get a Secured Credit Card
The frustrating part of bankruptcy is that afterward you may have difficulty getting approved for credit cards or loans. In order to begin rebuilding credit, you may have to resort to a secured credit card, which usually requires a security deposit of at least $250. You can use secured cards just as you would any other card, and your payments are reported to the credit bureaus. Once you have established a positive payment history, you can qualify for unsecured credit cards, but it likely won’t happen over night.
Set Up Automatic Payments
The best way to avoid late payments and missed payments, which can hurt your credit rating more than anything, is to set up automatic payments a few days before the due date. It’s extremely easy to mess up all your hard work by simply forgetting about one payment. If you aren’t comfortable setting automatic payments for your bills, consider, at least, using a digital calendar that can remind you when payments are due. Otherwise, you run the risk of making a late payment and starting a snowball of debt that includes late fees and higher interest rates.
You might be excited and anxious at rebuilding your credit, but it’s best to take it slow, especially when applying for new credit and loans. Even if you are approved for everything you apply for, which is unlikely, multiple inquiries can affect your credit score as well. Plus, adding too many new accounts within a short time can raise some red flags. Start out with one credit card or loan and then build a payment history with that account.
Avoid Credit Repair Services
You’ll likely encounter a number of services and professionals claiming they can repair your credit for you. These services, however, often end up being a waste of money and they don’t actually help your credit rating. There is no legal way to magically erase your bankruptcy from your credit report. It may be difficult at first, but it’s best to start slow and work on repairing your credit yourself. In the long run, you’ll save yourself some frustration and money by avoiding services claiming they’ll fix your credit overnight.
Don’t forget to share these tips for repairing credit after bankruptcy. If you have any advice to add, please share it in the comments below.