The Steps You Should Take to Rebuild Credit After Bankruptcy
You may have recently gone through the bankruptcy process to put an end to the vicious debt cycle you were dealing with, but you’re now stuck dealing with a low credit score. Although it may not be ideal to have a low credit score, there are different steps you can take to improve your score over time. It may be a process, but taking the right steps now could help you increase your credit score a little bit each month, ultimately leading to a major improvement in just one year. Many people worry about the negative impact bankruptcy will have on their credit score, but it’s something you can change if you’re both patient and persistent. High street lenders are unlikely to lend to someone that has just been discharged from a bankruptcy but there companies around that specialise in providing loans to people with very poor credit scores, so this could be an option if you do need to borrow.
Obtain a Secured Credit Card
Start the process of building your credit off on the right foot by applying for a secured credit card. These credit cards are often offered to those with bad credit. Instead of just receiving a set amount of credit on the card, you’d need to pay a fee to receive a small amount of money on that secured credit card. You’re essentially paying a fee in the beginning as a safety precaution. The payment you make is commonly referred to as a security sum.
You can focus on building your credit by paying for small purchases with your secured credit card and then you can start paying off the amount you’ve spent in a timely manner. If you continue to follow through with this process, you should start to see your credit score increasing, even if it’s only increasing by a small amount over the span of several months. The great thing about the secured credit card is that you can get the security sum back if you decide you’d like to close the account at any point.
Apply For a New Bank Account
When you’ve got bad credit, some banks aren’t willing to work with you. They may not allow you to create an account with them, which is frustrating. However, because the banking industry is quite competitive, it’s possible that at least one of the different banking agencies would allow you to create a personal account where you can start saving funds.
Apply For a Loan With a Co-Signer
Obtaining a loan isn’t always easy when you don’t have the best credit. However, applying for a small loan with a co-signer who does have good credit could help to improve your chances of getting approved for the loan. You might not need a loan for anything specific, but taking one out and then paying it back within a short amount of time could help you bring up your credit score over time. The best thing to do is to make sure you’re not trying to take out a loan for too much money because you don’t want to end up falling behind again, getting into new debt, and then causing any trouble for the co-signer.
The reason many lenders are willing to provide a loan to someone with bad credit if they get a co-signer is that they’ll expect the co-signer to pay back what was borrowed if the person with bad credit doesn’t pay the money back to them. As long as you understand the terms and conditions that come along with the loan and you have a co-signer who is willing to help you out, you may be able to work on improving your credit score by taking out small loans from time to time.
Apply For Small Loans From Personal Lenders
If you don’t have someone who can co-sign for a loan, try applying for small loans from personal lenders. You may attempt to borrow a small amount of money that you’ll pay back as soon as you get paid by your employer. If the transaction goes over smoothly and everything gets paid back on time, you’ll have another good mark added to your credit report.
If you can’t find a local lender to provide you with a small-term loan, consider looking online. It may be possible for you to obtain a loan online where you’ll receive a deposit of the funds into your bank account in just a few business days.
It takes time to improve your credit score after going through the bankruptcy process. You may have decided to file for bankruptcy because you were dealing with too much debt and couldn’t find a way to get out of it. It was the right solution for you, but now you may be concerned about your credit score. It isn’t always easy to have access to different things or to even get bills in your name when your credit score is low.
If you’d like to have a better credit score, you can take the right steps now to get a higher score over time. Some of the different things you can do would include applying for secured credit cards, applying for bank accounts, applying for loans with a co-signer, and even applying for small-term loans where you’ll pay back what you’ve borrowed rather quickly.