REBUILD YOUR CREDIT
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HOW TO REBUILD YOUR CREDIT
You have filed for bankruptcy and now you need to rebuild your credit. Although your bankruptcy may stay on your credit report for 7-10 years you are able to begin rebuilding your credit immediately after your bankruptcy case has been discharged. You are actually less of a credit risk than before your bankruptcy filing because you have discharged most of your debts. But you will need to start proving that you have learned from your mistakes. There are steps that you can take in order to rebuild your credit.
Here is a list of ideas that can help you in your road to re-establishing good credit.
- Make a budget. Track your expenses for a couple months to see how much money you are spending and where the money is going. Then, create a realistic budget that fits your monthly income. This will put you in the frame of mind to only spend what you have and save what you don’t have to spend.
- Open a savings account. Making regular deposits into a savings account will give you a source for an emergency fund. This will help you to avoid charging and borrowing money you don’t have.
- Use cash. Instead of using credit to make purchases use cash. You will force yourself to use only the money that you have and this will help you to save more.
- Pay all bills on time. Stay current on your mortgage, rent and utility payments, in addition to any other monthly payments you have. You want to keep from having any delinquencies reported to the credit bureau’s, which would further damage your credit.
- Order your credit report. Make sure the bankruptcy you filed has accurately been reported on your credit reports. You should track your credit so there are no errors reported on your credit report. Additionally, you may list your reason for filing bankruptcy on your credit report. You may want to do this if you went through a divorce or had some medical problems. This won’t help to increase your credit score but it may help lean a potential lender one way or the other.
- No more debt. Avoid incurring any debt. Avoid rent to own and buy-here-pay-here places.
Get a credit card. Getting a credit card is an excellent way to rebuild your credit. The best way to rebuild your credit with a credit card is to make small purchases and pay the balance off monthly. You can choose to get a secured credit card, which is where a bank holds your money and you are given a card from that bank the credit limit you have deposited with the bank. You can also choose to apply for an unsecured credit card. With any type of credit card you choose to apply for do your research. You should shop different banks to find the best interest rates and fees. With either type of credit card you choose you want to avoid paying any up front fees. Finally, you don’t want to apply for to many credit cards as this may hurt your credit rating. The most important thing with credit cards is to only charge what is in your budget to pay. Refrain from promising yourself that you will pay it with money you really don’ have.
- Credit card tip: When you use your credit card deduct that amount from your checking account balance. This way you insure that you have the money to pay your bill in full when the monthly statement comes.
- Keep your job. Keeping your job and having a steady income will help you when you have started to rebuild your credit. It will go a long way to helping you secure a vehicle or home loan.
- Avoid scams. You need to be smart in the decisions you make in working towards a brighter financial future. Use common sense in the financial decisions you make. Be sure to ask questions about anything you are confused about. If you are unsure about anything, call a friend or speak to a professional.
Follow these steps to rebuild your credit and you will be on your way to a brighter financial future. It is essential that you get into a good practice of keeping your budget and not buying what you don’t have the money for. So, work hard to follow these steps and you will be on the right track to rebuilding your credit.
HOW TO PLAN A BUDGET
List your monthly income sources.
- Your regular paycheck
- Social security, unemployment or pension benefits
- Self employment income or commission checks
- Child support or spousal support
- Any other sources
List your monthly expenses.
- Mortgage or rent payments
- Utility payments
- Vehicle payments
- Vehicle upkeep
- Grocery bill
- Childcare payments
- Insurance payments
- Credit card payments
- Any other regular monthly payments
List your discretionary monthly expenses.
- Dining out and entertainment
- Hobbies, gifts and travel
Now total your income and expenses. If you are spending less than you making then you’re in good position. But if you are spending more than you are making then you have work to do. You will need to change the way you are spending your money.
You now need to review your expenses. You also need to review what cash you are using. You need to go back to your expenses and prioritize your spending. Plan out your budget so you are spending less money than you are making, therefore allowing for extra money to be saved. By prioritizing your expenses and sticking with your budget you are putting yourself in a position to keep you from overspending and putting you into debt. So, plan your budget and stick to it so you can start saving for important things, like retirement.
If you have any further questions on bankruptcy or are thinking about filing a bankruptcy, contact a Bizar & Doyle bankruptcy attorney by calling us at 888-536-0213 or by completing the brief free bankruptcy evaluation.
* Some exceptions apply. Must qualify for a Chapter 7 for offer to apply. Fee does not include court costs or credit counseling/debt management fees.
A bankruptcy/debt consolidation web site.