A bankruptcy definitely puts a black mark on your financial history, but it's not an insurmountable problem. As tempting as it can be to burn all your credit cards, swear off loans, and attempt to live a completely credit-free life, it's not necessary to do so, and it's not the most financially sound plan. Even if you never wanted to buy a home or finance a car again, you may need to pass a background check just to rent an apartment, or even to get some jobs. Therefore, the smart thing to do is start rebuilding your credit right away. Here are some tips that can help.
Set Up A Schedule to Pay Your Bills on Time
Your payment history makes up a sizeable chunk of your credit score, so a quick and simple way to give yourself a boost is to make sure that your payments are made on time. If you've had problems with that in the past, you might need to use some new tools to ensure that you make your payments on time.
One way to do this is to simply sign yourself up for auto-pay. Most utility companies and creditors have the ability to simply take the money out of your bank account by the due date (with your permission, of course) so that you don't have to remember anything. If you don't always carry a bank balance large enough to pay off your monthly bills, you may also be able to sign up for email bill payment reminders so that you can make sure you have the money in there on the right dates. If one of your creditors doesn't offer this service, you can always set up your own email alert with an online calendar to help remind you.
Apply for Secured Credit
Contrary to popular belief, there are a number of credit card companies that will give you a credit card after a bankruptcy. However, you'll probably have to start with a secured credit card.
A secured card is a credit card that requires you to pay a deposit before you can use it. Your credit limit is usually equal to the amount of your deposit. Once you get the card, use it cautiously. Make small purchases that you would be making anyway – like groceries – and then pay off the bill in full every month. There's no need to carry a balance to rebuild your credit. It may take a few years, but after making the payments on time for a certain period of time, the bank will most likely be willing to offer you a secured card.
Review Your Credit Report
Keeping an eye on your credit report is always a good idea, but it's especially important after a bankruptcy. You need to be certain that any accounts that had balances wiped out in the bankruptcy are updated accordingly – you don't want them to continue to be marked open or in collections.
You can get a free credit report once a year from each of the three credit reporting unions. It's a good idea to stagger your requests for a free report, rather than getting them all at once – that way, you can get an update on your credit report once every four months.
Don't pay big bucks for credit repair agencies that claim to be able to clean your credit report – there's no legal way to have a bankruptcy or other legitimate debt removed from your credit report early. You can do more for yourself for free by being smart with your bills, cautiously building new credit, and keeping a watchful eye on your credit report. (For more information, you can contact Bill Bodensteiner Attorney At Law)