Bankruptcy can help you start over. But after it’s all said and done, you may worry you won’t be able to rebuild your credit, limiting your purchasing power.
However, that’s not always the case. While bankruptcy stays on your credit score for at least ten years, it’s not impossible to rebuild. Often, many people can recover from bankruptcy while reaching many of life’s greatest financial landmarks.
4 tips for rebuilding credit
Here are a few things that could help:
- Check credit reports regularly for errors: While these reports are meant to reflect the current state of your credit, they aren’t always perfect. According to a study from the Federal Trade Commission, nearly one-fourth of American consumers identified some inaccurate information on their credit report. If you recently filed for bankruptcy, you should make sure the correct accounts get discharged and that the filing date is accurate.
- Utilize certain credit cards: Bankruptcy can limit your credit card options. However, that doesn’t you won’t qualify at all. Depending on your circumstances, you may either be eligible for a secured credit card. This card requires an upfront deposit. Or you may qualify for a retail card, which has lower requirements but often comes with unfavorable interest rates.
- Get a credit-builder loan: Credit-builders differ from other types of loans. Instead of receiving the money upfront for a loan, the lender typically puts this money into a savings account until the borrower pays back the amount in full. And if you pay it back on time, it can help boost your score.
- Request payments get reported to the credit bureaus: If you’re making an effort to boost your credit score, tell your lenders. Depending on the circumstances, they may send your payments to the major credit bureaus, giving your score an accurate reflection of your improvements. However, different scoring models take different payments into account when factoring your overall rating.
Bankruptcy doesn’t have to mean financial failure
Sometimes, life throws unexpected curveballs, leading even the most responsible consumers into financial turmoil. When that happens, it can leave them and their families with a sense of uncertainty. Luckily, consumers of all incomes can rebuild their credit and their lives by taking the right steps after bankruptcy.