Hundreds of thousands of people each year use the process of bankruptcy to give themselves a fresh start. This is a fresh start out from under the heel of debt collectors, threatening letters and insurmountable debt. Bankruptcy is a lifesaver for many people, but it does come with a downside: your credit score takes a hit.
After your bankruptcy is final you will have a dark spot on your credit history for the next 10 years. All is not lost, though. You can start rebuilding your credit almost immediately. In that way, once the spot is finally lifted from your history, you will hit the ground running with a prim and healthy credit score. These are a few ways to get started right away.
Keep up with your finances
One of the most basic ways to rebuild credit is to make more than the minimum payment on remaining debts and never make a late payment. Making a comprehensive budget and sticking to it is not glamorous but it is the best way to keep unexpected deficits from sneaking up on you. Bankruptcy should have provided you much needed breathing room - use it to stay on top of your bills and build an emergency fund.
Investigate a secured credit card
Once you are on top of your finances again, you may want to look into a secured credit card. A secured credit card requires a cash deposit equal to the card's max balance which is charged if you miss a payment.
For example, if you make a deposit of $100 you will receive a credit card with a max balance of $100. If you are late on a payment, the lender will deduct the amount you owe from the $100 you left with them.
This is a great way to learn to stay on top of your credit cards and not overcharge. If you do go this route, be sure that the card will return your deposit if you decide to close the card.
Consider a small loan
Diversifying your credit will reflect well on your credit report, a low balance loan for a necessity like a stove or needed renovation will keep the spending bug away. Plus, paying it off early will go an extra mile in bolstering your credit. It will take time for a lender to grant you a loan at a reasonable rate, but it is a strong building block if you are sure you can make the payments.
There are many ways to rebuild your credit after bankruptcy. Consider your options, make smart decisions and your credit will be growing well before the 10 year mark.