People who file for bankruptcy know that doing so will negatively affect their credit for a time. Additionally, a personal bankruptcy filing leads to the closure of revolving lines of credit the same day that someone files.
The average person’s credit score takes a three-figure hit when they file for bankruptcy, and it may be some time before they qualify for the best credit opportunities after their bankruptcy filing. Individuals who follow the three tips below may be able to rebuild their credit scores more quickly than those who do not make credit improvement a post-filing priority.
Seek out new lines of credit quickly
Credit card companies are often eager to offer opportunities to those who have just obtained a bankruptcy discharge. Secured credit cards that require a deposit and cards with annual fees and high interest rates are often available within weeks of a bankruptcy discharge. While the terms of such credit cards are often less than ideal, the sooner someone develops a history of making monthly payments on time, the more rapidly their score improves after their discharge.
Keep revolving lines of credit under control
Many people end up filing for bankruptcy due to the slow accumulation of credit card debt. Therefore, bankruptcy can be an opportunity to learn new credit habits. Making a point of paying off credit card balances every month can help someone build a positive credit score without putting them at risk of future financial hardships. They may also have an easier time qualifying for bigger lines of credit and other types of loans when they keep their debt-to-income ratio low after a bankruptcy.
Monitor the credit reporting bureaus
Every person should be able to request a free copy of their credit report once a year. There are also numerous different credit score monitoring services, many of which are completely free. When someone secures a discharge through a personal bankruptcy filing, all prior blemishes typically fall off their credit report with only the bankruptcy itself remaining. Those seeking to rebuild their credit as quickly as possible after a personal bankruptcy need to regularly check their credit report to ensure it is accurate. They can challenge and remove inaccurate information or details that the bankruptcy should have replaced.
Those who look at a personal bankruptcy filing as an opportunity to improve their circumstances rather than a sign of personal failure may feel more optimistic about the process and about building a better life after bankruptcy. Filers who understand the benefits of bankruptcy may have an easier time improving their finances after addressing their debt.
