You have options for rebuilding credit after bankruptcy
Are you worried what filing for bankruptcy will do to your credit score? Many people think they should avoid bankruptcy when dealing with their debt issues. However, while filing for bankruptcy certainly can affect your credit, it could also put you on the path to a better financial situation.
Your credit may already be suffering if you have missed payments, late fees, a lot of debt already and other financial issues. Bankruptcy may allow you to discharge or repay your debts so that you can start fresh. Then, you can take steps to rebuild your credit.
Make your payments
Once you have completed your bankruptcy process, you can help rebuild your credit by remaining vigilant about paying your bills on time. Making each payment on or before your due dates could reduce the risk of your credit suffering due to falling behind again. Missing payments could be as one of the biggest mistakes that could harm your credit.
Another option for rebuilding your credit relates to utilizing secured credit cards or loans. Because you may not qualify for unsecured cards or loans immediately after your bankruptcy filing, you can use secured lines of credit to improve your scores. These cards and loans involve placing your own money down as collateral, and the amount you provide generally acts as your credit limit. Of course, you will want to ensure that the card or loan issuer reports your payments to the credit-reporting bureaus.
Another way to potentially obtain a loan or credit card in hopes of rebuilding your credit is to have a co-signer. This individual will need good credit of his or her own in order to bolster your credibility with the loan issuer. However, the issuer will hold your co-signer liable for any outstanding balances if you miss your payments, which could put a friend or family member in a difficult spot.
Moving forward with bankruptcy
These options do not represent all that ways that you could potentially rebuild your credit. If you have been avoiding bankruptcy, learn how to become debt free and restart your life in a new direction.