If you have recently gone through bankruptcy in the past few months or year… you probably breathed a deep breath of relief as soon as the bankruptcy judge signed off on your discharge paperwork.
At that point… you probably realized you were FREE from the stress and worry of having all those evil creditors call you from sunup to sundown… threatening to sue you into oblivion… and cursing you like you were a dog!
I know exactly what you went through. I know have a credit score of about 747. But it wasn’t always like that. Keep reading… as I briefly tell you my journey of bouncing back from bankruptcy and rebuilding my credit… and how you can use the same SEVEN tips & tricks I used… to build up my credit again.
Here’s My Story of Bouncing Back From Bankruptcy…
I personally went through a Chapter 7 bankruptcy back in 2001 at the tender, young age of 21. I had to declare bankruptcy over some foolish mistakes I had made in my youthful college days.
I’m actually kind of ashamed to tell you this… but the amount of bad debt that I had back then wasn’t even that much (it was about $30,000)… but since it was mostly in credit card bills… and I was just a young guy back then with NO earning potential, it absolutely crushed me!
Anyways, the BIGGEST problem I had back in those days shortly after declaring bankruptcy… was rebuilding my credit. You probably understand EXACTLY what I am saying.
Try as I might, it seemed like I was stuck in the mud turning my wheels… and not going anywhere. Have you had those feelings while trying to bounce back from your bankruptcy?
So frustrated and perplexed… but refusing to give up… I searched for the BEST tips that I could use to get myself out of this financial and credit hell hole I had dug myself into.
Use These 7 SIMPLE Tips to Rebuild Your Credit
Now most of these tips will be simple for you to implement on your journey in rebuilding your credit… but don’t let that fool you. You must implement these tips with great frequency… and not expect your credit rating to jump up high in the first few years… after your bankruptcy is discharged.
Give it time and have patience… and before you know it… you will have EXCELLENT A++ credit rating just as I do.
- Get a secured credit card – Okay, let me start off by saying that for there are pros and cons to this. The pros are that these credit cards are pretty easy for you to apply for and qualify for, shortly after your bankruptcy… as well as they build up your credit.
The cons to getting a secured credit card is that compared to your average credit card interest rate… they absolutely suck! (hey, I had to be truthful with you). Also, for the most part you will probably not get one with anything over a $300-$500 credit limit. Also… they may charge you a bunch of b.s. fees, like application fees, yearly fees, bad credit fees, etc.
Another thing (this may be a pro or a con… depending on how you look at it)… is a secured credit card is backed up with the amount of money that you deposit into it. My advice to you would be to deposit about $100-$500 into it (if you can)… spend about 70-80% of that amount each month… and then pay off the full balance each month.
- Get store or gas cards – It’s a pretty simple process to get one of these cards… and if you’re able to qualify for one… you might as well use it, because it will help you to build up your credit. And since you’re going to spend the money on food, groceries and gas anyways… you might as work on rebuilding your credit at the same time!
- Pay your bills on time – I am probably preaching to the choir on this one… but I’ll say it again. Pay your bills on time. After all… NOT paying your bills on time is a huge reason why you went into bankruptcy… or are currently contemplating filing bankruptcy (I know that was the case for me).
One thing that many people don’t realize is that many utility companies (not all)… report to the credit agencies whether you pay on time or you pay late. Like most people, I did not know this fact… and like most people, I continued to pay my utility bills late.
Once I found out about this… I decided to get all my utilities on auto-pay… that way I didn’t have to deal with the hassle of mailing out a check each month.
- Have an OPEN checking or savings account – Okay, most of you reading this can skip over this step… because you already have a banking account… but for those of you who do NOT have a banking account of any sorts… c’mon now, why? We don’t live in the 1930′s Great Depression era!
You need to get have at LEAST one checking and one savings account.Many lenders will look at this… and realize that you can handle money responsible.
Also, when you open up your account(s) at your bank… it will help you to manage your money. And when it comes down to it… it is dreadfully hard to save money… if you have no saving’s account.
So do yourself a favor and make sure you open up a checking and savings account, so you can rebuild your credit.
- Live within your means – Just because you filed bankruptcy and don’t have credit card collectors calling you… and debt collectors stalking you at work any longer… does not mean you have a free ticket to live life up and blow all of your hard, earned cash.
No, make the conscious decision right here and now… that you will live within your means. A good rule of thumb that you can use is as follows:
* Consumer debt after you pay for your rent/mortgage and transportation expenses should be no greater than 20%
* You should aim to save at least 5 to 10% of your income each month.
* If you are currently paying too much for your vehicle or housing… get rid of it, move, whatever you have to do… to get out of that situation.
- Just say NO to Payday Loans - Although I’ve used them in the my past pre-bankruptcy days with no problems, whatsoever… I have heard so many HORROR stories about the negative ramifications and outcomes people have had using payday loans, that I just have to advice you to not get them.
They charge excess interest rates and the penalties are STEEP if you don’t repay them back on time. Miss a payment and you have put a huge dent into your credit rebuilding efforts! If you need more money, try this solution:
“Work more hours, get a part-time job, start a small side-business, do whatever it takes for you to succeed at the task of rebuilding your credit after bankruptcy.”
- Co-sign on a loan – Now this isn’t a necessity… but if you are in need of something which would require a loan (a house, a vehicle, etc.), depending on how soon it is after you had filed bankruptcy… you probably won’t qualify for a loan by yourself.
But if you have a family member or a friend who is willing to co-sign on the loan with you… then by all-means do it. Just make sure that you count up the costs, and are able to make whatever monthly payments are needed to satisfy the loan requirements.
These are just a FEW tips on how you can rebuild your credit after you file for bankruptcy. Please feel free to browse our site on more tips you can use… to build your credit score back up after you have filed a Chapter 7 or a Chapter 13 bankruptcy.