Bankruptcy can happen to anyone. Chances are, if you were able to file for bankruptcy, your credit is already low. Your credit is probably around the five hundred range after you have filed for your bankruptcy.

You may be fretting about your credit, which is normal. But, the lasting effects of bankruptcy on your credit score will fade over time. These steps will help you bounce back after a bankruptcy.

Make A Habit of Checking Your Report

There are plenty of online tools that allow you to check your credit report for free. Although these are not always one 100 percent accurate, they will give you an idea of where you stand.

Checking your report regularly will let you see if there are also any errors that come to your attention. In relation to your bankruptcy, make sure everything is accurate.

  • The correct accounts are discharged and the account states: “$0.00”.
  • The filing date is correct.

Checking and reporting errors can make all the difference in your credit score. Make sure to dispute any errors you may find.

Create A Budget and Emergency Fund

Since you filed for bankruptcy, you probably went through some level of financial counseling. This counseling might have briefly highlighted budgeting.

Look into anything extra your bank may provide, such as mobile banking. Usually, mobile banking can help you view your expenses easier. Nonprofit counseling agencies can offer you advice on budgeting. If you have a smartphone, there are also apps available for download.

These apps are not all made the same, but some can be very helpful, especially when they can link to their bank account.

Emergency Fund

An emergency fund goes hand in hand with a quality budget. Having a little bit of money saved away for a financial emergency can really keep you out of debt if something were to ever occur. These prevents you from maybe having to take out a loan or rack up credit card debt.

Secured or Retail Credit Card

You may think that you are starting at ground zero, the same as someone with no credit. But that’s not the case. Credit card companies know a lot about your history. Secured and retail credit cards usually give the lender peace of mind when borrowing to someone with low credit.

Secured Card

A secured card usually requires a down deposit first. This gives the lender a bit of peace of mind. The limit of your card will usually be equal to the deposit. So, the lender is not out any money. This is a great option to mend your credit until you are eligible to apply for an unsecured credit card.

Read the fine print before applying for a secured card. You will want to make sure you are eligible before you apply. This is because applying for a secured card can cause a drop in your credit score.

Retail Card

Retail credit cards are often a good bet for people trying to raise their credit straight out of bankruptcy. A retail card is exactly what it sounds like. When you are shopping, and you go to check out, remember the cashier asking if you want to sign up for a credit card? The only downside to these cards usually is that they typically have higher fees.

Seek Out A Secured Loan

You look like a risky investment to lenders. This could cause problems if you need to raise up your credit score. Thankfully, there are secured loans that can help you on your financial journey to positively impact your report. A secured loan is also referred to as a credit-builder loan.

If you are wanting a secured loan, you will first want to look for it at community banks and credit unions. The first type of secured loan involves borrowing money against money you already have deposited. The other type of secured loan involves the money loaned to you being placed into a savings account and only being released when you have made necessary payments. The financial institution is secure with not being out any money by you, hence the name of the loan. In return for making your payments, the credit union or community bank will send your financial report to the credit bureaus.

Seek Out A Co-Signed Loan

Co-signed loans can significantly raise your credit score, but they might be tricky to obtain due to your history. In order to get one of these loans, you need to have a family member or good friend with good credit who is willing to sign for you. If you don’t make payments on your loan or decide not to pay it, whoever signed for you will bear the responsibility of having to pay back your loan. Their credit score will also be affected.

Become an Authorized User

This means that someone, either a close friend or relative, adds you to their credit card account. Your credit score could raise if you are put on an account with a positive history. The good news is that your credit history from the bankruptcy will not affect their credit score.

You can use the credit card in your name. But you are in no way legally responsible for paying it off. Whoever’s account you are on is the one responsible. The only thing to be wary of is that whatever credit decisions the account holder makes will directly affect your credit score. So, bear that in mind.

After filing for a bankruptcy, it may feel like your credit score is in a hole. But, no matter how far down your credit score has plummeted, there will always be a way to raise it back up. Rebuilding your credit score will require a few steps along the way. It will take time, patience, and positive transactions. These credit repair answers to bankruptcy are the first steps and tips to lead you towards a higher credit score.