Despite what some may think, achieving financial recovery and success after bankruptcy is not impossible. Even if your credit score has taken a hit, there are several proactive steps you can take to help raise it back to its former level.
Here are just a few ways you can rebuild your credit score after bankruptcy.
How Bankruptcy Can Affect Your Credit Score
Before learning how to rebuild your credit score, it is important to note how bankruptcy can impact it. Several factors can influence your overall score after filing for bankruptcy, including:
- Type of bankruptcy: Chapter 7 and Chapter 11 bankruptcies can remain on your credit report for up to a decade, directly impacting your credit score.
- Starting Credit Score: If your credit score was high before filing for bankruptcy, you’ll notice a more significant drop afterward.
- Number of Accounts: The more accounts that are included in your bankruptcy filing can result in a greater drop in your credit score.
However, smart financial management and focus on rebuilding your credit score can significantly improve your journey to recovery.
Rebuilding Your Credit Score After Bankruptcy
Make Timely Payments: Staying on top of your bills, including your credit card payments, can help improve your credit score. It is also crucial to keep up with payments on existing loans.
Apply for a Secured Credit Card: Unlike traditional credit cards, secured cards require a refundable cash deposit upfront that serves as a collateral and determines your credit limit. Secured card issuers then report your account activity, including payments and balances, to major credit bureaus. Responsible use can help you build a positive credit history over time.
Consider a Credit-Builder Loan: These are offered by credit unions and a few online lenders to help credit card users improve their score. Credit-builder loans allow them to make fixed payments before the lender reports them to credit bureaus.
Check Your Credit Report for Errors: Mistakes happen, even on credit reports. Keep an eye out for any inaccuracies or accounts that should be discharged in your bankruptcy.
For more information about rebuilding your credit score after bankruptcy, contact us today at (914) 600-5502.
