4 tips for rebuilding your credit after a bankruptcy

Many individuals will avoid filing for bankruptcy because they worry about doing irreparable harm to their credit scores. In general, the harm has already been done while they were fighting to keep their heads above water. Late payments, missed payments and other loan defaults can cause financial damage. It is time to file for bankruptcy, get a fresh start and begin rebuilding the credit rating.

Your credit rating is a fluid number based on several financial factors. You can positively impact your score by paying close attention to your report and acting when necessary.

• Review your credit report: It is important to review your credit report regularly. You can see if there are any accounts open that should be closed (a department store charge card that was never used) or accounts showing activity that are not yours (a joint credit card still being used by your ex) for example. Identifying and correcting these errors can help your credit score.
• Build credit with a secured card: Many people choose to start rebuilding their credit with a secured credit card. These cards act like a bank account. You deposit a certain amount and then can only use that amount out of the card. In this way, you protect yourself from overspending as only the amount you are comfortable spending becomes your credit card balance.
• Avoid past mistakes: For most, the option to file for bankruptcy represents a last resort. It is wise to look at your financial past to recognize the decisions that ultimately put you in harm’s way. Was it medical debt, credit card debt, overextending your finances for a mortgage? Avoiding these same issues can be the key to protecting your financial future.
• Build a budget and stick to it: Like the previous tip, thoroughly analyzing your finances to create a realistic budget can help you avoid past problems. You can carefully examine your income to determine how much needs to be allocated for bills, groceries and miscellaneous spending. Sticking to the budget can help you start building a savings account to use in the event of a financial emergency.

If you are seriously considering bankruptcy, you probably should have already filed. You will not do permanent damage to your credit score – but you will have to work to improve it. Follow these tips and avoid past mistakes to build a strong credit score after bankruptcy.