How to Start Rebuilding Your Credit After a Bankruptcy?

Bankruptcy is essentially a legal proceeding in which the court will allow you to eliminate or restructure your debt. The court will also halt any future creditor action against you and your assets while the bankruptcy is in progress. There are two main types of bankruptcy, Chapter 7 and Chapter 13, determined by how much debt you have. The more debt you have, the more difficult it can be to jump back into rebuilding your credit.

You’re not alone if you’ve already gone bankrupt or filed for bankruptcy. But building your credit score back up once you’ve filed for bankruptcy is not an easy road and might take years. So, how can you get back on track? Maybe a Greene County, NY bankruptcy attorney can be of great help during your journey of rebuilding your credit after a bankruptcy.

Anyways, here are some essential steps you should take to rebuild your credit after bankruptcy:

• Always make on-time payments

This is a no-brainer, but one that you should always follow. If you are making payments consistently, and late payments aren’t a recurring pattern, then you already have the start of a credit history. Keep making your payments consistent, and you will start to build your credit history in your own way.

• Handle past-due accounts

Now if you have a past-due account, don’t delay in addressing the issue. At the very least, pay the minimum amount that you scheduled to pay and bill them for its payment as soon as possible. In doing so, you can show that you are keeping your promises and capable of managing your finances, which will make rebuilding your credit easier.

• Keep credit card balances low

A credit card balance is a direct reflection of your ability to manage your finances. If you have a month-to-month and no-interest balance, then you are probably still in that stage of rebuilding your credit. However, if you’re carrying a high balance on plastic, then your credit score might not look great. Paying off the balance right away will do wonders in rebuilding your credit.

• Start an emergency fund

Having an emergency fund will not only help you get out of debt, but it will also show creditors that you are capable of managing your finances and will help in rebuilding your credit score. 

• Consider a secured credit card

A secured credit card can be an excellent choice when you want to rebuild your credit and keep your monthly payment low.