While bankruptcy will discharge most of your debts, your credit score will be negatively impacted. It can be hard to get a credit card, a mortgage or even a personal loan with a low credit rating, and if you do, the interest rates could be high.
Fortunately, your situation is not permanent. The bankruptcy stays on your credit report for 7 or 10 years, depending on the type you filed. However, there are things you can do to improve your score in the meantime and dramatically reduce problems.
It takes time and financial discipline
You have probably heard of the phrase “When you find yourself in a hole, stop digging.” In other words, if you are in a difficult position, don’t do anything that will make it worse. It’s something you should adhere to when rebuilding your credit score after bankruptcy.
Do not fall into bad habits like taking on unnecessary debts, reckless spending or spending beyond your means. Write out your spending and saving strategy and stick to it. Stay current on your bills. You may also want to consider getting a secured credit card or a credit builder loan to supplement your efforts and repair your creditworthiness and trust with lenders. Learning more about how these credit facilities work will help you make an informed decision.
At the same time, do not expect overnight results. Consistency is key, and every small step is some progress made, no matter how insignificant.
Don’t be afraid of debt relief actions
Understandably, picking up the pieces after bankruptcy can seem daunting and overwhelming, especially if you do not know what to do or where to start. If you’re deeply in debt, however, don’t let fear limit your options. Consider seeking guidance to help you get back on your feet and regain financial freedom.