If you’re considering bankruptcy, one of your biggest fears may be how it will impact your credit score and creditworthiness long term. This is a source of hesitation for many people facing significant debt.
It’s true that bankruptcy stays on your credit report for seven or 10 years (depending on which type of bankruptcy you file). It’s also true that filing for bankruptcy can initially make it very difficult to qualify for access to any type of credit. That being said, however, rebuilding your credit score and your access to credit can happen more quickly than you might expect. In today’s post, we’ll discuss some tips on how to speed up the process.
According to the Bankrate website, bouncing back from bankruptcy can start with carrying and using a limited amount of cash for most purchases. This will be somewhat necessary, of course, if you don’t have valid credit cards. But using cash comes with other added benefits. First, it makes you more conscious of your spending and may make you think twice about what you buy. Second, using cash means that you can’t spend what you don’t have.
Another seemingly small act that can make a big difference is to diligently pay your bills on time. The timeliness of your payments makes up 35 percent of your credit score. After bankruptcy, simply paying bills on or before their due date can really start to bump up your score. Some bills, like utilities, are not always reported to credit companies. But if you have a positive history of paying these bills on time, you can sometimes request to have them added to your credit history, further improving your record of payment history.
Finally, after some time has passed, you may want to apply for a secured credit card. Unlike a regular credit card, this card requires a deposit, the amount of which becomes your credit limit. Because the credit card company doesn’t risk losing money (due to the deposit), the card is available to people with low credit scores. And by paying the bills on time, you will be rebuilding your score.
Bankruptcy is a major financial event that will have a significant impact on your credit score. But it really can be a chance for a fresh start and an opportunity to rebuild a strong financial reputation. If you want to learn more, please discuss your options with an experienced bankruptcy attorney in your area.