Fixing Your Credit Even After Bankruptcy

Bankruptcy is a harrowing experience that one should, obviously, avoid if one can. However, it is not the end of the world. It is not even the end of your financial life. You still have a chance at borrowing money and even investing in a home. With some patience and humility and willingness to work hard and monitor your finances, you can gradually rebuild your credit.

Don’t be deceived by creditors. They will regard you as a major target because you will be starting fresh. However, you must take care not to make the same mistakes as before. If you haven’t before, now is the time to start thinking about managing your money wisely.

First, try to determine what drove you to bankruptcy. Did you spend too much? Or was there a crisis that was outside of your control, such as sudden unemployment or expensive medical problems? That is a difficult situation to be in, but you don’t need to despair. Just think about how you can save money, what you can exclude from your budget. There are guaranteed to be some things that you can live without, if you just get used to it. If your city offers good public transportation, use it. Take the bus or subway instead of spending money on gas. Read books instead of paying for cable. Learn to cook simple but satisfying meals at home. You may even like the changes that you make in your life.

Additionally, keep track of the money you spend and what you spend it on. Pay your bills on time. Start putting a certain amount of money into a savings account. Some banks have ways to do this automatically. You may need to get a second job until you save up some money. This may be unpleasant, but the discomfort is temporary; whereas, your financial security will ideally be permanent.

Another tip, rather obvious but too often ignored: don’t use your credit card very often. The less you use credit cards, the better. Creditors will try to get you to sign up for all kinds of cards because of your recent bankruptcy. But the cards’ high interest rates can get you back into debt again very, very fast. If you don’t have a choice and must use a credit card, try to pay it all off within one pay period. Doing so may actually increase your credit rating.

As long as you keep paying your bills on time, your credit rating will gradually improve. You can check your progress by obtaining reports on your credit rating. Did know you can get one credit report a year for free? Indeed, you can get three credit reports a year, one from each of the national credit bureaus: Equifax, TransUnion, and Experian. If you see something you don’t like, you can dispute it. The bureaus are obligated to look into the matter and respond to you within 45 days.

Finally, again, beware of credit card companies’ attempts to deceive you by exploiting your desires. They will offer to “instantly” rectify your bad credit. These offers are either lies, or the companies will charge you for something you can do for free. There is no way to remove true recent data from a credit report legally.

Recent additions:

• How About Do It Yourself Credit Repair?
• What’s A FICO Credit Score?
• Credit Repair After Foreclosure
• Credit Card Debt Consolidation
• Consumer Credit Counseling
• A Beginner’s Guide to Credit Scores
• Contacting The Credit Bureaus