Contrary to popular belief, filing for bankruptcy does not blackball you from borrowing or using credit ever again. You can actually start rebuilding your credit almost immediately after filing. The following are some simple ways to help you responsibly rebuild your credit:
Get a High-rate Credit card Many people are scared to jump back into credit cards after bankruptcy, especially if the interest rates seem exorbitant. The key to rebuilding your credit is to show that you can be trusted to pay back what you borrow. Many credit companies might consider you a risky bet after your bankruptcy, so you’ll most likely need to take out a card with a higher rate. As long as you make sure to read and understand the company’s terms, and to pay the card off each month on-time, it shouldn’t matter what the interest rate is.
Buy only what You can Afford This is the easiest way a credit card can send you right back on the path of bankruptcy; overspending. After bankruptcy, you will need to re-evaluate your spending habits and monitor all your accounts. Treat your credit cards as if they were debit cards; when you’re running out of money you must stop spending. If you feel you need help with controlling spending habits, apply for a secured card.
Secured card A secured credit card allows you to pay ahead of time and charge against your money. This is a great tool for over spenders, because you need the money upfront instead of the other way around. This is a good way to stay a month ahead on bills versus a month behind. The only downside to a secured credit card is that not all companies report it to the Credit Bureau, which does nothing for your score. Additionally, some companies will list it as secured credit, which can look even worse to other lenders. Make sure to ask if and how they report to the Credit Bureau before applying.
Find a Co-signer for a Loan This one may be tricky, but sometimes a friend or family member will agree to co-sign on a loan with you. This will allow you to get a loan you probably wouldn’t qualify for on your own. One idea for improving your credit is to re-invest your loan into a CD. This is a great idea for people who are worried about credit cards and overspending. You don’t need to use the money and the interest you earn from the CD will most likely cover part of the interest on the personal loan. Like everything else, making on-time payments on your loan is crucial for improving your credit.
Department Store and Gas Station Cards Apply for cards at stores where you usually use cash or a debit account. If you have trouble budgeting with too many credit cards, keep your receipt and set aside the cash after each purchase or keep a balance sheet of your checking account and credit accounts, to make sure you’re always ahead.
Life after bankruptcy is not as hard as you may think. If you feel overwhelmed by your debt or have creditors harassing you for payments you should contact a Killeen and Waco bankruptcy attorney to learn more about bankruptcy and how it can help you.
About the Author: Jeff Davis is the Owner of the Davis law firm and a highly experienced Killeen and Waco bankruptcy attorney. To find out more information about a Killeen or Waco bankruptcy lawyer, please visit www.jeffdavislawfirm.com.