Filing for bankruptcy is never an easy decision. Bankruptcy negatively affects your credit score and will stay on your credit report for at least seven years. A bad credit score means that obtaining loans will not only be difficult, but also more expensive. Most credit card companies impose a higher interest rate on credit applicants who have filed for bankruptcy.
However, it is possible to rebuild your credit after filing for bankruptcy. It will take time and patience from the first step. Remember how long it took you to rack up the bills that led to bankruptcy, and be prepared to give yourself at least that long to work your way back to financial health. However, it is possible to be on your way to financial recovery in as little as two to three years after receiving debt forgiveness from the bankruptcy court.
First of all, know what your credit reports say about you. Everyone is entitled to a free credit report from the major credit reporting agencies each year. Request your free credit report and examine it carefully. Correct any errors and refute any discrepancies in your report. Think of this as your starting point for rebuilding your financial life after bankruptcy. It can only get better from this point on.
The next step would be to apply for a guaranteed line of credit. This limits your credit to the amount you have on deposit with the lender. Only charge for items that you will normally pay cash for during the month. Then pay off the balance in full before the due date each month. Do this every month and little by little you will demonstrate your ability to pay your debts and improve your credit worthiness.
Remember the spending habits that caused your bankruptcy, and resolve (even if it’s July) not to commit them again as you rebuild your credit. Set aside a portion of your income as savings, no matter how small this amount is. Saving is a good habit that you can build for life, regardless of whether you are trying to increase your credit score or not.
Second chances abound in this great country, even for those who have had to file for bankruptcy. It will take hard work and discipline, but definitely less than seven years to get your life in order. Start today.