Bankruptcy can be a welcome relief when you are struggling with debt. But bankruptcy can also leave a significant dent in your credit score. If you have recently filed for bankruptcy, you might be wondering if there is anything you can do to repair your credit score.
Your credit score begins to improve with each positive entry on your report. And with a better credit score, you can enjoy cheap credit and mortgages among other benefits. Here are two effective tips that can help you rebuild your credit score after going bankrupt:
Pay your bills on time
Keeping up with payments on any existing loans and credit cards can go a long way in bringing your dented credit score back to life. The more you pay your debts in time, the more favorably lenders will approve your application for new credit. Late payments, on the other hand, will end up in the credit bureau. And besides late fees, this can hurt your quest for a better credit score.
Live within your means
This is pretty straightforward. Whether you are recovering from bankruptcy or not, setting a budget that lets you live within your means is good practice. Have a clear understanding of your monthly income and work out a budget around this. If you are spending more than you are earning, establish exactly where your money is going so you can avoid wastage. The idea is to balance your budget so that you do not find yourself in a situation where you have to turn to credit to make ends meet.
Your credit score is a reflection of your financial history. Lenders refer to it when determining your creditworthiness and the ability to pay back debt. It can also affect your ability to rent a home or even find work. That’s why it’s in your best interest that you figure out how to rebuild your credit score after bankruptcy.
