Bankruptcy is a great way to get out from under burdensome debt and get a clean financial start. However, a recent bankruptcy does show up in your credit profile for up to 10 years, which can make it difficult for you to go out and obtain new credit. If you want to enjoy great credit after bankruptcy, you have to build it. If you simply do nothing, you may find yourself with poor credit for a very long time. Following are three ways you can restore your credit after filing bankruptcy.
Pay Your Bills
The best way to improve your credit rating after bankruptcy, or during any time of your life for that matter, is to pay your bills in full and on time. If you have a debt payment due to filing Chapter 11 bankruptcy, make sure you pay it without fail. If you excluded your car or house from your bankruptcy and still have those payments to make, be sure to do so. You can't file bankruptcy again to get rid of negative payment information, so make sure all of your information is positive.
Get Secured Credit
If you don't have any payments to make, find some. One of the best tools that you can use to build your credit after bankruptcy is a secured credit card. A secured card allows you to put down a deposit for a line of credit. When you use the credit, you pay on it just like you would any other credit line. You may also want to look into a credit-builder loan. A credit-builder loan places the money you borrowed into a savings account. When you make all the payments, you can withdraw the money.
Make Smart Decisions
In addition to making all your payments on time, you have to show that you've learned to use credit wisely. One of the best ways to do this is to keep your revolving credit balances low. Your credit utilization accounts for 30 percent of your credit score, which is a huge chunk. And the easiest way to score big in this area is to keep your credit card balances low.
It takes time to restore your credit after filing bankruptcy, but it doesn't take as long as you would think. If you make your payments on time and use your credit wisely after bankruptcy, you will enjoy a good credit rating within a few years. Speak to a legal professional like Arthur M Richard to learn more.