Rebuilding your credit score and financial situation after navigating bankruptcy can seem like an impossible task. It is common to worry that filing for bankruptcy will have a negative impact on your credit score and will prevent you from fulfilling your long term goals. By creating a recovery plan after bankruptcy, however, it is possible to have a second chance at rebuilding your credit score. The following will review some of the steps that you can take to rebuild your credit rating.
Keep Your Paperwork in an Easily Accessible Location
While you likely want to forget about the bankruptcy process after it is over, if you plan on requesting a loan, it is important to keep bankruptcy paperwork on hand. It is also possible that a creditor might contact you after the bankruptcy process to claim that you owe money that you no longer actually do. In these situations, bankruptcy paperwork can establish that a debt was discharged.
Create a Strategy to Rebuild Your Credit
When recovering from bankruptcy, it is important to focus on achieving your financial objectives. One of the ways to begin rebuilding your credit score is to apply for a secured credit card. With a secured credit card, a person will put down a deposit before using the card. There are several obstacles associated with secured credit cards, however, which include annual fees and high interest rates.
Avoid What Caused Your Bankruptcy
When tasked with rebuilding your credit, it is a wise idea to consider what caused you to file for bankruptcy in the first place and to avoid these factors. If you never understand what factors led you to file for bankruptcy in the first place and address them, you will be much more likely to consider filing for bankruptcy in the future.
Focus on Your Attitude
The primary factor that helps a person recover after the bankruptcy process is attitude, which should involve attempting to learn from the process. People who view bankruptcy as just another unfortunate event do not always learn as much from the bankruptcy process. Instead, it is a helpful approach to view the bankruptcy process as a chance to begin restoring your credit score as well as an opportunity to demonstrate that you are now able to make payments on time and keep credit card balances low.
Inspect Your Credit Report
As you begin to rebuild your credit score, you can benefit from keeping a close eye on your credit report. It is also important to dispute anything on your credit report that is not accurate. By making sure that your credit report is kept free from errors, you will be able to improve your credit score as fast as possible.
Budget Appropriately
It is important to assess your budget on a routine basis. By budgeting correctly, you will avoid any large expenses that can eventually damage your credit score.
Make Payments as They Come Due
A person’s payment history comprises 35% of their credit score. As a result, it is vital for a person who wants to quickly rebuild a credit rating to make payments on time. If you do not pay bills on time, there is a risk that they will end up proceeding to collections, which can appear negatively on your credit report. If you have a difficult time remembering when your payments are due, it is possible to establish automatic payments online so that you will not have to worry about forgetting important dates.
Stick to a Budget
Many people end up declaring bankruptcy because they fail to budget adequately. One of the best ways to avoid another bankruptcy filing is to live within your means.
Pay Your Balances as They Become Due
Not only is it important to make payments on time, it is also beneficial to avoid making payments on a credit card too early. Instead, a person should strive to pay debts a few debts before they are due. The reason why early payments can be bad is that a creditor might not create a statement balance for earlier payment. As a result, credit bureaus might not obtain information that a person owed and paid off a debt.
Contact an Experienced Bankruptcy Lawyer
If you need assistance navigating the bankruptcy process, do not hesitate to contact attorney Melanie Tavare today to schedule a free initial consultation.
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