When credit card bills, medical bills, or other expenses start to pile up, filing for bankruptcy can be your last resort. Unfortunately, this will stay on your credit report for ten years, but it is necessary to start taking these steps now to slowly but surely recover from bankruptcy and on your way to better credit.
The first step that is necessary to take is start rebuilding your credit. It is important that you use secured credit cards. Secured credit cards require you to deposit a certain amount of money in order to secure the credit line. This way, you can only spend the money deposited into the account and the limits are typically very low. Unlike prepaid cards, these cards report your account activity to major consumer reporting agencies. Secure credit cards are different from the average credit cards, but they are essential for rebuilding your credit history. Use your card monthly, but only a fraction of your credit. Control your spending and more importantly, pay your bill on time.
It is crucial to keep a very small to no balance at all on your cards. This rule goes for both secured and unsecured accounts because low balances help raise credit scores. In addition, you have leeway in case of an unanticipated event occurs.
Review the decisions and errors made that caused you to fall into bankruptcy. After acknowledging what mistakes caused this pitfall, learn from them so it can be avoided in the future. Set up a savings account or start budgeting properly in order to prevent this from happening again.
Another method to help raise your credit score is making payments on your student or installment loans regularly and on time. Want to know a way to raise your credit score faster? Start paying off more than the minimum, if possible. These bill-paying habits do not go unnoticed, they account for 35% of your credit score.
You may feel discouraged after filing for bankruptcy, but be aware that it is very possible to recover from this difficulty and rebuild your credit. If you start taking the listed steps early and properly you will improve your chances to getting back to your feet. Over time, you will be able to not only rebuild your credit history, but also start practicing correct spending habits. Bankruptcy may reflect your past, but remember that you are in control of your future.
Pranjali works for the University Archives at North Carolina State University. She volunteers at Occupational Therapist offices in Charlotte and Raleigh. Pranjali is in the University Scholar’s Program and a member of Psi Chi Honor Fraternity. She is a co-captain of an Indian folk-dance team at NC State.
While she is not busy applying for graduate school, she enjoys working out, traveling, and listening to music. Her interests include fashion, all things French, and spending time with friends and family.
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