Going through a bankruptcy may be overwhelming, yet also interesting. Although on one hand, it has its challenges, on the other, it allows you to establish a clean slate.
Don’t worry! With the right strategy, you can rehabilitate your credit back to the way it was, or even better. Here are a few things you can do to build your credit standing after bankruptcy:
Remember the Mistakes You’ve Made
Bankruptcy may be a painful past that no one wants to remember, but remembering is actually the very first thing you need to do to improve your credit score.
First and foremost, you must determine the cause of the bankruptcy to prevent ever having to deal with it again. Recall what you may have done wrong, and what type of transactions you’ve done. This way, if you see yourself engaging in the same pattern, you can stop yourself from falling into the same pitfalls.
Pay Remaining Debts
If you’re left with some restructured debts that you need to pay, you must first show that you are capable of paying them off. Don’t start dealing or initiating other transactions right away. First, prove that you can meet current debt payments on your own without seeking financial help from others. You will eventually improve your income to debt ratio as well as your credit standing.
A lot of lenders are half-hearted when dealing with a borrower who maintains many outstanding debts. It’s best to pay outstanding debts first, and you should be ready to go.
Budget and Plan
You are given a fresh new start to take more time and focus on budgeting and planning among all else. Your credit score is important, but so are your savings, and your emergency fund.
Stay on top of your finances by first putting part of your money on savings and emergency funds. Once this is established, plan the remaining money for other necessary expenses. This may not seem much, but saving money for emergencies can save you from unexpected expenses that may hinder the improvement of your credit standing.
Secure Your Transactions
Now that you have shown your capabilities of handling debts and current finances, you must show lenders that you are worth investing in. You may do this by applying for a secured credit card, or a secured loan. You may also ask someone with a good credit standing to co-sign your credit card or loan. Having security over your transactions will improve your credit score, as banks or other financial institutions will consider you as a risk-free investment.
Pay your Debts on Time
Now that you have dealt with your past expenses, and have learned to budget and plan your finances, the only thing left to do is to pay your debts on time. This is the culmination of everything you’ve worked hard to get back. If you consistently pay your debts on time, you’ll be able to improve your credit score over time and even surpass your best credit standing.
Life after bankruptcy may be difficult to manage but it doesn’t have to stay that way. There are plenty of means to build your credit standing. If you want to learn more about improving your credit, feel free to contact us and schedule a consultation. Get in touch with us by calling 305-445-4855.
We can help you file for bankruptcy relief and assist you in getting back on your feet.