Bankruptcy provides a clean financial slate for those facing crushing debt. But, after the repayment plan is created or debts are discharged, one challenge remains – a problematic credit score. For example, a Chapter 7 bankruptcy will often pull someone’s credit score down into the 500-range. It is normal to feel like rebuilding your credit after bankruptcy is an uphill battle. However, a few simple steps can help you get back on track.
Get a new credit card
Applying for a new credit card may seem counterproductive after declaring bankruptcy, but getting a new card and paying it off every month in full is a great way to rebuild your credit score quickly. There are even certain cards with features to help those with bad credit.
Pay bills on time
One of the most significant contributors to your credit score is your history of paying bills on time. Ensuring bills are consistently paid on time after bankruptcy goes a long way to rebuilding your credit.
Monitor your credit report
Keeping a close eye on your credit score can help you monitor your progress as well as fix any mistakes along the way. Some credit cards will even provide a free credit score monitoring service.
Start an emergency fund (even a small one)
Research by the Urban Institute found that even a rainy day fund of $250-$750 can help individuals and families avoid missed payments. Plus, those with at least some money saved are less likely to take out payday loans and other expensive lines of credit that are difficult to pay back.
Finding your way out from under overwhelming debt is no easy task. For help determining what debt relief avenues are available to you, or what else you can do to rebuild your credit, consult with an experienced bankruptcy lawyer.