Who wants to wait around 7-10 years for a bankruptcy penalty to expire? Learn how to quickly rebuild your credit after filing for personal bankruptcy
Bankruptcy is not the end of your financial life. In fact, it can be a fresh start so you can move forward and build a better financial outlook like never before.
Taking the right steps now will help you avoid facing another round of trouble later. It helps ensure that things don’t go wrong this time, as you’ll have the right strategy and tools to stay out of bankruptcy courts and on the right financial path.
Financial distress (bankruptcy in particular) will almost always generate a lot of negative items on your credit report. Every missed payment account, overdraft credit limits, and collection accounts will appear on your credit file.
Once your bankruptcy is complete, at least some of these negative comments will need to be removed. Overdrawn credit limits should be set to zero, collections accounts should be closed, and your account statement should say things like “cleared.”
Of course, creditors can be a bit slow to update this information, and that slowdown will also hurt any efforts you make to rebuild your credit. So the first thing to do after bankruptcy is to clean up your credit report through credit correction .
Right after filing for bankruptcy, creditors are not going to “break your door” to send you their best credit card offers. But you will need to start building better credit.
To do that, you need an open credit account that you can use strategically to slowly build your score. Creditors offer secured credit cards as an easy way for high-risk borrowers to build better credit.
The types of debt you have matter when it comes to your credit score. So you don’t just want to have credit cards, because this won’t show that you have a good mix of debt. With this in mind, your next step on the road to better credit is to obtain a smaller loan that you will have no trouble paying.
In most cases, this will be a small personal loan. You can use the money you receive for anything: home repairs, major purchases. Or even some people take out loans and divert the money to an investment. This way, you get the credit benefit of paying off debt while building a better financial outlook at the same time.
In some cases, especially if you really need a slightly larger car loan . This does not mean that you are heading to a luxury car dealership and going crazy. Instead, go for a much cheaper car, and you may have to turn to a lender who works specifically with high-risk borrowers.
Whichever loan you choose, always pay your bills on time every month. If there is no early repayment penalty, make larger loan payments when you have the money available. Once the loan has been paid off, consider applying for a different loan so that you can continue to diversify and build a positive payment history on your credit file.
Monitoring your credit after bankruptcy is one of the best uses of a credit monitoring service other than preventing identity theft. After all, if you’re not looking at your credit score, how do you know if what you’re doing is having the effect you want?
By subscribing to a credit monitoring or control service, you can see how each step you take affects your credit score. You can also make strategic decisions, such as after a few months of paying off your secured credit card, when your credit has improved enough for a car loan, or it might be better to take out a smaller loan first.
Facts: The negative credit impact of bankruptcy diminishes over time, so you can recover even before the 7 or 10 year sentence expires.
You will also be able to watch, when you’ve recovered enough, do bigger things, like buy a new home. Once you have recovered your credit score to a level that satisfies you, you can cancel your service, or continue it to ensure you maintain the highest possible score 365 days a year.
This has nothing to do with rebuilding your credit after bankruptcy, but it is another important step to take. Once you complete your bankruptcy filing, all the accounts you had in collections should be liquidated.
But that doesn’t always mean that collectors get the message and stop calling you. If you still get collection calls after your debts have been paid off and settled in court, then you need to take action. You can even seek compensation for the collector’s harassment if they really don’t leave you alone.
Remember, if you have credit card debt, tax debt, or even want to repair your credit score, you can reach Credit card debt relief Professional USA by calling at +1 229-296-3170 and a expert will give you a free consultation.